Standard Chartered was the Number 1 rated custodian in six of the markets it serves in the 2001 Global Custodian agent bank review. IT actually edged HSBC out of the top slot in Hong Kong for the first time, and emerged as arising force in Japan.
But a 58 per cent increase in the provision for bad debts to US$731 million in the 2001 results published today has reinforced Standard Chartered’s overall reputation as an accident-prone bank. It follows the loss of its New York headquarters in the WTC atrocity last September and the messy and unexpected departure of CEO Rana Talwar in November last year. It seems duff loans to corporates in Malaysia and Argentina are largely to blame for the massive inflation in bad debts, along with an increased losses in the Hong Kong credit card business Standard Chartered bought from Chase.
But Standard Chartered also faces the chronic challenge of its over-exposure to a regional economy which has stubbornly refused – with the notable exceptions of China and India, where Standard Chartered has yet to increase its exposure – to recover from the Asian Flu of 1997-98. One effect is a regional custody business short of equity sub-custody mandates, but the bank is bullish about the impact of its cash management products and new Internet reporting tools due to be launched this year.
Pre-tax profits were down 20 per cent to $1,148 million (2000: $1,438 million).