Standard Chartered stunned the City when it announced the departure of its longstanding finance director Richard Meddings – previously considered a candidate for chief executive – and embarked on sweeping changes to its operations around the world.
Chief executive Peter Sands announced plans to merge the wholesale and consumer divisions in an attempt to energise the emerging markets bank, which is suffering its first profits slump in a decade. The move is likely to lead to job cuts.
He was forced to insist "I'm not going anywhere" after the departures and promoted the current boss of the wholesale division – Mike Rees – to become his deputy. Chairman Sir John Peace also had no plans to leave, said Sands.
One of the highest paid bankers in the industry after receiving nearly £35m in the past four years, Rees was immediately seen as the heir apparent to Sands, appearing to have usurped Meddings, previously regarded as the natural successor.
Amid concerns about the bank's financial strength the shares fell to their lowest level since it paid £415m to settle money laundering allegations in the US just over a year ago, though they recovered some of their losses to end the day down 2% at £12.83 after Sands insisted the bank was comfortable with its capital position.
Sands and Meddings, who insisted the decision to go was his own and taken in the Christmas holidays, had been credited with steering the bank through the financial crisis relatively unscathed until 2012's money laundering scandal in the US.
"It was totally my decision to leave," said Meddings, often a candidate on lists drawn up for top jobs at rivals. "After 11 years on the board of this bank and seven years as finance director it seems a natural time to step away," he added.
The bank was facing questions about the decision to keep paying Meddings his £800,000 salary until next year, as well as a potential bonus, even though he will leave in June. The 55-year-old is also walking away with unvested shares currently worth about £8m but whose actual value will only be known when they pay out over the next three years. Meddings' pension pot is likely to reach £7m by the time his 12-month contract expires next year.
Meddings had been caught up in the money laundering scandal when remarks by an unnamed bank official to a US colleague – "You fucking Americans" – were said have come from him.
Also leaving is Singapore-based Steve Bertamini, head of the consumer division, whose role is "falling away" according to Sands. Bertamini was hired in 2008 and the last £900,000 instalment of his signing-on fee will be paid in May – two months after he leaves the board. He will have his relocation to the US paid for by the bank, receive his £600,000 salary until this time next year and take away with him unvested shares worth £6m at current market values, although that value is subject to change .
Sands described both departing executives as "outstanding leaders" and "good friends" who would be missed. He said neither was receiving any form of payoff.
Last year it emerged regulators had required Meddings to be stripped of responsibility for the risk functions at the bank and Sandy Chen, analyst at Cenkos, said: "FD Meddings' departure is key – his position had already begun to erode at the end of last year, with risk oversight transferred from him to Peter Sands." Chen said later his concerns had been allayed and he had been reassured that further management changes were not on the way and that the bank could generate enough capital. Sands – chief executive since November 2006 – sought to quash speculation about a boardroom rift. "We remain very comfortable with our capital position and have no plans [for a rights issue of new stock]. We have a unified board which is fully behind the strategy".
Meddings said he had not decided what to do next and quipped he might consider financial journalism.
One investor said: "It's not an ideal world having a finance director leaving without a replacement".
There was speculation that Naguib Kheraj, one-time Barclays finance director and a non-executive at Standard Chartered, might be a candidate while head of strategy Anna Marrs was also cited by some.
Rees' salary will rise to £975,000 pounds from £735,000 in April although his earnings potential fall by 40%.
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