Background information
The Standard Chartered Bank operates in Britain and has its headquarters in London. It is among the world’s foremost emerging markets bank and operates in over 70 countries. They also have provisions for treasury services. Its network comprises more than 1700 branch offices and outlets and more than 73000 people work for them. The Standard Chartered Bank was formed in 1969 after the merger of two banks – The Standard Bank of British South Africa, established in 1862, and The Chartered Bank of India, Australia, and China established in 1853. (Timber 2007)
Since both, the banks had individually acquired several smaller banks their network was quite large. But in 1986 they went through some rough times since The Lloyds Bank of UK bid to take over Standard Chartered.
However, they were unsuccessful and after the takeover failed, Standard Chartered went through several major changes. Standard Chartered created certain provisions against the loans and debt exposure of the Third World nations and these were given to those entrepreneurs and corporations who were unable to keep the commitments they made. Standard Chartered also had to make several divestments mainly in South Africa and the USA and even held a few asset sales. (Rath 2008)
Standard Chartered took over the Grindlays Bank in 2000 from the ANZ Bank, thus further making its presence felt in the field of private banking. In 2005 they further acquired the Korea First Bank by bidding higher than HSBC and re-branded it as SC First Bank. Later, in 2006 they even acquired almost 81% of the shares of Union Bank in Pakistan, and finally in 2008 were able to completely acquire the American Express Bank Ltd. Although Standard Chartered is based in Britain, it does not have many customers in the UK rather almost 90% of its incomes are from the Middle East, Asia, and Africa. (Rath 2008)
Problems
The involvement Standard Chartered had with the Third World had made them face some serious problems than the other banks. The unstable economic and political conditions which the Third World faced created constant threats for the bank as well. Due to this, they suffered heavy losses of over ₤250 billion. They have also gone through financial problems since one of their strategies, by which they focused more on commercial banking schemes, failed since more and more customers preferred international banks which offered them several financial services. (Frynas & Pigman 2008)
Solution
To deal with the unstable conditions Standard Chartered always prepared themselves so that they could adapt to the changing environment and government around them in the Third World. When the governments changed Standard Chartered dealt with the situation by bringing about new nationalization, communization, and regulations. Sometimes even ownership was transferred to the native financers to deal with the situations. They also completely shut down most of their unprofitable businesses and even streamlined their internal operations. (Adams 2006)
Solutions and Recommendations
To deal with the problem Standard Chartered faced due to its involvement with the Third world could be solved if they properly restructure their operations and continue doing so. Standard Chartered should divest some of its holdings especially non-core assets to raise funds. The management needs to change some of their strategies and focus more on consumer-oriented banking, rather than commercial, and also on institutional and corporate banking especially in Africa and the East.
References
- Adams, C 2006, ‘AFRICA: Standard Chartered/First Africa’, Africa Research Bulletin: Economic, Financial and Technical Series, vol. 43, no. 6, pp. 17010A-17010B.
- Frynas, G & Pigman, A 2008, ‘First mover advantages in international business and firm-specific political resources’, Strategic Management Journal, vol. 27, no. 4, pp. 321-345.
- Rath, T 2008, Leadership Without Borders: Successful Strategies from World-Class Leaders, John Wiley and Sons, London.
- Timber, S 2007, Standard Chartered Bank: Analysis, ABT Ltd., Kolkata.