Standard Chartered board moves offer brief respite from Temasek pressure

Thu Oct 4, 2012 5:50am EDT
 
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By Saeed Azhar and Kelvin Soh

SINGAPORE/HONG KONG (Reuters) - Standard Chartered's (STAN.L: Quote) move to name four independent directors last week was welcome news for its biggest shareholder, but Singapore sovereign investor Temasek is holding tight to its view that the board is still too heavy with bank executives.

According to a source familiar with the matter, Temasek saw the bank's board appointments last week as "a step in the right direction", but added the board's make-up still falls short of what Temasek would like to see.

The source cited the example of Singapore Telecommunications (STEL.SI: Quote), which has a 10-member board which includes just a single executive - the company's CEO. Temasek TEM.UL owns more than 50 percent of SingTel.

Six of Standard Chartered's 16 directors hold executive positions at the bank, including CEO Peter Sands, Finance Director Richard Meddings and Asia Chief Executive Jaspal Bindra.

Temasek, which owns 18 percent of Asia-focused Standard Chartered, has highlighted the issue of board affiliation before, and in May abstained from voting to re-elect several of the bank's non-executive directors - sending a clear signal it disagreed with how the bank constructed its board. Most UK company boards have a mix of executives and non-executives.

Standard Chartered said on Friday Lars Thunell and Margaret Ewing would join the board as non-executive directors next month and Om Prakash Bhatt and Louis Chi-Yan Cheung would join as non-executives in January. It said it was the "first phase" of its board succession planning that started a year ago.

STRESS POINTS

Since investing in Standard Chartered in 2006, Temasek has done well with its stake as the bank's emerging market focus and basic banking model allowed it to steer clear of the 2008 financial crisis. The bank has produced 10 consecutive years of strong profits. But the relationship faces two stress points.   Continued...

 
An exterior view of the Standard Chartered headquarters is seen in London August 7, 2012. REUTERS/Olivia Harris