Risk of protectionism growing

Standard Chartered CEO
Peter Sands

On the occasion of the G20 Seoul Summit and Business Summit, The Korea Times held an email interview with two financial gurus ― Standard Chartered CEO Peter Sands and Citi CEO Vikram Pandit ― to share their insights about the global financial market and economy in the post-crisis world. ― ED.

By Kim Jae-kyoung

The Group of 20 (G20) nations have successfully pulled the world economy back from the brink by their coordinated policy response. However, with the global crisis phasing out, major countries are focusing more on their own interest rather than overhauling the global financial system.

In an interview with The Korea Times, Standard Chartered CEO Peter Sands said that the specter of protectionism and

Headquarters of Standard Chartered in London

currency wars are looming larger as cohesiveness among G20 countries are loosening in line with a slow recovery of the global economy.

“In many ways the challenge is more difficult now as the recovery has taken hold and is gaining pace; countries have inevitably been refocusing on more domestic concerns and that makes it harder to forge the same degree of consensus and coordination,” he said.

“There’s a much greater risk now of protectionism, currency wars, exchange and control. What we need to see is the G20 leaders reaffirming their commitment to open markets, free trade and globally consistent regulatory standards.”

The former McKinsey director pointed out that the crisis has accelerated the shifts in economic power and dynamism from the West to the East.

“In the countries I visit across Asia, Africa and the Middle East, I sense a real excitement about the prospects for growth, the opportunities for the future, the sheer scale of the trade and investment flows across the regions,” he said.

“On the other hand, the West is in the midst of quite a difficult period of consolidation, deleveraging and rebalancing and those very different dynamics do create the possibility of tensions and frictions within the world and we need real leadership from the G20 to help tackle these challenges and balance the competing priorities to the benefit of the global community.”

The veteran banker said that the Business Summit initiated by Seoul is an excellent initiative.

“I hope will become a recurrent event at future G20s. Ultimately if the G20 is going to be successful in fostering global growth, it has to engage the minds and get the input of business because ultimately it’s business that’s going to drive economic growth and job creation,” he noted.

“The G20 Summit is tackling a range of issues, including trade and investment, finance, green growth, corporate social responsibility, all of which are very relevant to the G20 priorities,” he added.

Business strategy

Sands said that Standard Chartered will continue to maintain its business strategy focusing on organic growth in its core markets, including Asia even after the global financial crisis.

“The fundamentals of our strategy are unchanged, focused on Asia, Africa and the Middle East, organically led with a conservative balance sheet driven business model and we run ourselves as one bank,” he said.

“We are well positioned in some of the most exciting growth markets in the world, we’re taking market share in multiple products across multiple geographies. The bank is in great shape.”

He stressed that the group’s top priority is to maintain our track record of delivering superior financial performance.

“This means we need to sustain the momentum in our wholesale banking business and to continue and complete the transformation of our consumer banking business. We always stay absolutely focused on the basics of banking and the way we have managed liquidity, capital, risks and costs.”

The Oxford University graduate expects that G20 leaders are unlikely to come up with dramatic solutions but they are able to reach more sensible agreements by putting more voices in the important decisions.

“I think it’s probably unrealistic to expect something quite as dramatic as a breakthrough, but what I do expect is a continuation of the progress that is being made to have a more coordinated approach to the management of the global economy,” he said

“More broadly, I think what you’re seeing in the G20 is this shift towards a somewhat different global governance paradigm, the shift from the G7 to the G20 means more voices involved in the crucial decisions and also you’re seeing Asia have a loud and more powerful voice,” he added.

Korea is SC’s key market

Sands stressed that Korea is one of the most important market for Standard Chartered both in term of history and the size of investment.

“Standard Chartered has a lot of history in Korea. We first entered Korea in the late 19th Century and we were one of the first banks to return to Korea when it reopened to foreign investors. It’s actually the group’s third largest market globally in terms of assets and if you think about it in terms of staff, we have about 85,000 staff worldwide and just under 10 percent of those are Korean,” he said.

“The investment we made in Korea in 2005 with the acquisition of Korea First Bank was actually the biggest acquisition Standard Chartered has ever done and it also makes us the largest foreign direct investor in Korea’s financial services industry,” he added. “So you can see that Korea is a very important part of Standard Chartered and it’s a very important part of our future.”

He hints that the group will continue to expand its presence here by making long-term investments.

“We’re continuing to invest in Korea, in our people, in our products and services, our brand and our channels and we have very big ambitions for the growth of our business here in Korea,” he said.

“We’re committed to building a sustainable business over the long term, upholding the highest standards of corporate governance, social responsibility, environmental protection and employee diversity; we’re committed to supporting our customers and clients in Korea,” he added.

Globally, the chief executive said that it will continue to stick to its clear strategy to become the world’s best international bank, leading the way in Asia and the Middle East.

“It proved resilient and successful throughout the crisis and looks now, if anything, even more right than before the crisis. We have a powerful culture with the sense of shared values and shared stories,” he commented.

“We have some distinctive organizational capabilities that give us competitive advantage. For example, in wholesale banking we are very good at delivering seamless cross border service for our corporate clients who are exporting and investing across many different countries,” he said.

Who is Peter Sands?
Peter Sands was appointed group chief executive of Standard Chartered in November 2006. Immediately prior to this Sands had been group finance director of Standard Chartered since his appointment as a group executive director in May 2002.

Prior to his appointment to the board, he was a director with worldwide consultants McKinsey & Co. He had been with McKinsey since 1988 where he worked extensively in the banking and technology sectors in a wide range of international markets. He was elected a partner of McKinsey in 1996 and became a director in 2000.

He graduated from Oxford University and holds a Masters in Public Administration from Harvard University, where he was a Harkness Fellow. Sands, who grew up in Asia, is married with four children. He was born on 8 January 1962.