LONDON Dec 16 Standard Chartered's recent
decision to strip its finance director of responsibility for
risk oversight was the result of intervention by Britain's
financial regulator, two sources with knowledge of the process
said on Monday.
The Asia-focused bank said two weeks ago it would move
responsibility for risk to Chief Executive Peter Sands from
Finance Director Richard Meddings. This was because the
Prudential Regulation Authority (PRA) expressed concern about a
potential conflict with Meddings' financial role, the sources
The intervention shows the PRA is becoming more active in
stepping in when it is unhappy with banks' internal structure,
to ensure clear lines of accountability.
The PRA, part of the Bank of England, took responsibility
for regulation and supervision of banks in April, assuming a
more hands-on approach to respond to concerns expressed by
lawmakers and taxpayers after the financial crisis that the
country's banking regulation had hitherto been too lax.
A report this year by the Parliamentary Commission on
Banking Standards made proposals to improve lines of
accountability for risk and said boards should protect the
independence of the chief risk officer.
Britain is close to passing a banking reform bill aimed at
improving industry standards, which includes replacing an
approved persons regime with a system aimed at making top
bankers more accountable for their actions and a broader
register to license bankers.
Meddings has been Standard Chartered's finance director
since November 2006, responsible for finance, corporate
Treasury, risk and corporate development. One of the sources
said the PRA's concern was not related to Meddings himself but
to the structure within the bank, which could have led to a
potential conflict of interest.
Standard Chartered's CEO for risk, Richard Goulding, will
report to Sands.
"This governance change ensures we are well placed to meet
future regulatory requirements," a spokesman for the bank said.
The PRA declined to comment.
Standard Chartered warned earlier this month that tougher
regulations were one of the factors contributing to a slowdown
in profits. It said that 10 years of record earnings were likely
to end this year due to this, as well as losses in Korea and a
slowdown in its key Asian markets