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Standard chartered boss Winters collided with a “grotesque” incentive created by the banker’s bonus cap. Lenders used the UK rules to cut salaries by 40%, boosting performance-based potential payments.
“The effect of (bonus caps) was that everyone got a grotesque increase in fixed wages,” the chief executive told reporters Friday. “Because grotesque was just the wrong incentive. … Please clip the coupon and don’t do a very good job.”
Winters, the longest serving CEO of the UK bank, has won £13.1 million this year, more than double what it earned in 2022. “I have to explain to my mother why my salary was cut in half,” Winters joked over the phone.
“My motivation for me at Standard Chartered was never about wages,” he said. Instead, he said it was “part of a great franchise.”
Winters’ 2024 pay package was nearly 50% higher than the previous year, with the £10.7 million package being paid from the incentive plan.
Chief Financial Officer Diego de Giorgi’s salary will be reduced by 33% with the new model, and if the target is met, his total package will be worth up to £7.7 million. He won £2.8 million in 2024.
Stanchart said the overhaul, released on Friday along with the annual results, “represents the most significant change over the years.”
Barclays and HSBC are taking similar steps to reduce fixed salaries for senior executives and increase performance-related bonuses.
The UK has announced plans to remove the cap in 2023, part of a post-Brexit plan to boost the city of London. The EU introduced CAP in an attempt to curb risk taking in the wake of the 2008 financial crisis.
Stanchart’s pre-tax profit fell 30% in the last three months of last year, with costs rising, even as wealth and market companies earned higher revenue.
The bank reported that statutory pre-tax profit for the fourth quarter fell from $11 billion the previous year, while analyst estimates fell from $983 million. The underlying pre-tax profit adjusted to account for restructuring and other expenses was $1 billion, in line with analyst estimates.
Winters said the results for the year, where pre-tax profits were reported to have increased 19% to $6 billion, up 100%.
“Our strategy. Winters, who has been operating the bank since 2015, said Stanchart doubled its investment in the asset management business in October, shifting its focus from smaller domestic clients to global institutions. I’ve said that.
The bank announced a $1.5 billion share buyback and said it plans to cumulatively return at least $8 billion to shareholders from 2024 to 2026.
Its annual net interest income was $10.4 billion, and the bank’s target was broken at $10.25 billion.
Stanchart has won a $441 million annual restructuring fee, including $156 million for a cost-saving program called “growth-friendly.” The bank said last year it plans to save around $1.5 billion over three years by simplifying the system.
Its wealth business, a key focus for the bank, reported a 36% increase in quarterly revenue, but increased 47% as revenue from its market units jumped in revenue from transactions.
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The underlying profits of bank tangible stocks are a measure of profitability, at 11.7% per year, up from 10.1% the previous year. We have raised our 2026 target from 12% to “approx. 13%.”
Stanchart stock has risen by more than 80%, surpassing the level the winter has been at the helm since lamenting the price of “jewelry” a year ago.
However, stocks continue to trade at a discounted price at the book value of bank assets. Hong Kong-listed stocks rose 1% on Friday before falling 0.4% in profits.
This month we named Maria Ramos, current member of the Stanchart board and former CEO of Bank of South Africa ABSA, as the next chairman.
In 2019, Winters attacked “immature” investors who protested about his salary.
