Standard Chartered: shock departure of finance director Richard Meddings

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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Standard Chartered forced by Bank to strip top exec of risk role

The Bank of England has forced Standard Chartered to strip its finance director, Richard Meddings, of his responsibility for risk at the emerging markets focused lender

The Bank of England has taken unprecedented action to strip a senior banker of key responsibilities due to concerns over potential conflicts.

Richard Meddings, group finance director of Standard Chartered, has been forced to give up oversight of the lender’s risk department under pressure from officials at the Prudential Regulation Authority (PRA), which is run by the Bank of England.

Mr Meddings is one of the most respected finance directors in the FTSE 100, and the PRA’s action is a sign of the tough approach being taken by regulators to ensure direct lines of accountability at the top of Britain’s largest banks.

The PRA is understood to have told Standard Chartered, the emerging markets focused bank, that it was “not happy” with Mr Meddings’s role, leading the lender last month to confirm it would hand responsibility for risk to its chief executive, Peter Sands.

The move is likely to cause shockwaves in the City as Standard Chartered got through the financial crisis without any taxpayer support and Mr Meddings was one of the main architects, along with Mr Sands, of the 2008 rescue of the British banking system.

One source with knowledge of the talks between the PRA and Standard Chartered said the regulator decided to act as it was concerned about the potential conflict between Mr Meddings’s finance responsibility and his duty to oversee the risk operations.

A spokesman for Standard Chartered stressed the risk unit would continue to be run by Richard Goulding on a day-to-day basis, adding: “This governance change ensures we are well placed to meet future regulatory requirements.”

Earlier this month, Standard Chartered warned its profits were unlikely to meet market expectations as it signalled the end of a decade-long run of record profits.

The profit warning followed a difficult 12 months for the bank in which it was fined $667m (£409m) in the US after an investigation into money-laundering found it had broken sanctions with Iran and other rogue states. More recently the lender took a $1bn writedown on its struggling Korean business, which has been hit by a series of labour disputes.

The interventionist approach taken by the PRA comes as regulators look to ensure important areas such as risk management are properly accounted for in the wake of several reports into the financial crisis that have recommended changes to the way senior bankers are overseen.

The final report of the Parliamentary Commission on Banking Standards called for a new approval regime for senior bankers that would see executives regularly reviewed if they took on additional responsibilities.

Andrew Tyrie MP, who chaired the Commission, said the PRA’s action against Standard Chartered was a welcome development.

“The risk function is crucial in banks and it’s equally crucial the job should be done at a senior level, in that a person should know they are personally responsible. It looks as if the regulator is pushing in the right direction,” he said.

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