Globalization SC Seeks to Seize Opportunities Amid Turbulence
By Kim Jae-kyoung
Staff Reporter
Standard Chartered Bank (SCB) is one of the global players Korean banks should look to for successful globalization. This is not only because the lender is located globally but also because it managed to ride out the severe economic and financial storms by capitalizing on its overseas networks and globally competitive risk management system.
SCB is one of the few global banks that enjoyed profit growth in 2008 when the world was at the center of the global financial crisis. In 2008, its income and operating profit rose 26 percent and 13 percent, respectively, to $13.97 billion and $4.57 billion, with 31 percent growth in customer deposits.
The handsome performance was driven by the wholesale banking sector. In the sector, SC saw its income grow by 43 percent to $7.49 billion. Growth was broad-based across all product categories and geographies, with global markets reporting a 60 percent jump in income and transaction banking 31 per cent.
``We remain open for business and are supporting our clients as they navigate this turmoil. We want to seize the opportunities arising from this turbulence. We have a clear and consistent strategy, and continue to invest for growth,'' SC Chief Executive Peter Sands said in a statement.
Sands' comments clearly illustrate the banking giant's vision and strategy for globalization, which has been the key driver for the lender's speedy growth over the past few decades.
Key Success Factors
There have been three forces behind the lender's successful globalization ― urgency of expansionary need, a clear focus on strategic markets and a global cadre of people.
For SC, the only way to grow was globalization. Unlike other major global banks, there is no home market for them. The lender grew from Singapore, Hong Kong, China and India where it has had a presence for about 150 years. The bank doest not have any major operations in the UK, its headquarters.
Together with urgency of globalization, its clear strategy and focus have played key roles in transforming itself into a global bank. It targets three key strategic markets ― Asia, Africa and the Middle East ― and has sought to become the best international lender in those regions.
``We have clearly focused on these markets, and we learned hard lessons when we deviate from our core strategy,'' Choi Jung-kiu, global head of strategy at SC told The Korea Times.
``We are in the right markets at the right time, and are well positioned for future growth as economic power shifts from west to east,'' he added.
Another key factor is its global cadre of people. It has 125 different nationalities on staff ― 60 in senior management. ``We have large pool of people who can and are willing to go out to other countries to transfer best practices and to build the business,'' Choi said.
Localization Strategy
When it goes into other countries, SC always pursues sustainability and long-term commitment for localization. The lender seeks to maximize its ability to secure people who understand cultures, languages, and ways of working in different countries.
Since its main strategy in every country is to grow organically, it tries to build a relationship on the local markets with regulators and with companies. The strategy of deepening client relationships paid off in 2008, with revenues from the top 50 clients rising 45 percent, while the number of clients with revenues of over $10 million rose 88 percent.
``Whatever investment we make in a new market, we have to recognize upfront that this is a long-term commitment, and we need to demonstrate that not only to our employees, but also to our customers, the communities and regulators,'' Choi said.
Thanks to diversified revenue sources across the globe, SC is now recognized as one of the most globalized banks in the world in terms of the key criteria of income and employee diversity.
First of all, although headquartered in London, SC derives more than 90 percent of its operating income and profit from non-home markets ― Asia, Africa and the Middle East.
The revenue source diversification is well manifested in its performance last year. Most of SC's key geographies delivered a strong performance with seven of the nine regions recording income of over $1 billion in 2008. Singapore saw operating profit before tax rise 67 percent, India by 37 percent, the Middle East and South Asia by 25 percent, Korea by 10 percent and Africa by five percent.
The robust growth of its markets and businesses creates international career opportunities for its employees, which has developed a large pool of global talent from around the world. It employs 75,000 people in 1,750 branches and outlets in over 70 countries
``Income and the number of employees have more than doubled over the last five years primarily as a result of organic growth, supplemented by mergers and acquisitions,'' Choi said.
Open-Mind Culture Leads SC’s Globalization