CEO Speaker Series With Bill Winters

Friday, May 21, 2021
China Photos/Getty Images

Group Chief Executive, Standard Chartered Bank


Cofounder and Co-chairman, The Carlyle Group; Chairman, Board of Directors, Council on Foreign Relations

Bill Winters discusses global economic recovery and the role of emerging markets, the need for corporate leadership in achieving climate action, and lessons learned throughout his career.

The CEO Speaker Series is a unique forum for leading global CEOs to share their insights on issues at the center of commerce and foreign policy, and to discuss the changing role of business globally.

RUBENSTEIN: Thank you very much. We're very pleased and honored today to have Bill Winters with us. Bill is the group CEO of Standard Chartered Bank, which is one of the largest emerging market banks in the world. It's an organization that is based in London, but is operating in seventy different countries around the world, has more than 87,000 employees, very large operations in Asia, Africa, the Middle East, and China—part of Asia of course—it has more than eight hundred branches around the world. Bill is a person who spent twenty six years of his career at JPMorgan, rose up to be the co-head of the investment bank at JPMorgan and then left in 2010 to start his own credit organization, Renshaw Bay, which later he in fact folded into Standard Charter when Standard Charter asked him to become the CEO, which he did in June of 2015. So, Bill, I'm going to thank you very much for taking time to be with us today. And where are you calling from? You're calling in from London?


WINTERS: I'm coming in from stormy London and it's a real pleasure to be here, David, thanks for having me.


RUBENSTEIN: Okay. So, Bill, my question is this first, during COVID, many of the U.S. banks have become very, very large and actually did very well financially. Did the same happen to banks based in Europe and around the world?


WINTERS: Probably not to the same extent, I think there were clearly a number of things happened during COVID. One was an absolute burgeoning of the U.S. capital markets and of course the U.S. banks benefitted disproportionately from that. But I think everywhere the consequences of tons of very cheap liquidity have had the effect of making the banking business both more challenging, because it's harder to make money in a low interest rate environment, but also safer because of the availability of liquidity to fund companies who found themselves with cash flow difficulties has never been so great. So I think most banks have recovered substantially from the lows, but I think the U.S. banks have raced ahead in many ways.


RUBENSTEIN:  So yeah, I was going to ask you about that. I would say that before the Great Recession, there were a lot of large European banks and then, because of the problems of the Great Recession, many of them either had government assistance needs or they just didn't survive as strongly as they did before, become as viable. Do you think that the U.S. banks now are so dominant in the world that it’s not healthy? Or do you think it's basically an okay situation?


WINTERS: You know, I think the U.S. banks are very strong. And so, in particular when you get to investment banking, so the truly global capital market, the U.S. banks are extremely strong. There's just a few banks that can hold their own at all, versus U.S. banks in global capital markets, but that's one sliver of the banking market. I think that the retail banking market is extremely well distributed. And interestingly, with the exception of Citibank, none of the U.S. banks have meaningful international operations, and Citibank itself has announced the divestiture of a number of its Asian and a few other operations, sale pending right now. So I think in...and obviously in the broader range of banking, whether it's asset management or transaction banking, I think it's much more distributed around the world. But certainly, in the core global capital markets business, the U.S. banks, including my old shop JPMorgan, and the top of the heap look like they're in a pretty strong position.


RUBENSTEIN: So I assume you were running your bank remotely for a large part of the COVID period of time, were you? And how did you find running the bank remotely?


WINTERS: I did. So I mean, we've had a year of this fun and games, as we all know. I spent six months in Asia. So I spent the second half of last year...I bit the bullet and endured the quarantine to get into the Asian bubble. But then was able to move around within that bubble. Well, not often, but I spent six months in Korea, Hong Kong, Singapore, and that turned out to be a real blessing, getting that close to the operations that I've been responsible for now for six years. But actually for a period of time, where you get to see people several times on a trip rather than once for a flyby was really helpful.


The other six months, I've been locked up in London like everybody else and while we've been able to get into the office from time to time—and I see that people are drifting back in now—it's nothing like the old days. And certainly the days of hopping on a plane and going and seeing a client or colleagues, or having internal meetings face to face, that's gone and I suspect it's going to be largely gone going forward, but not entirely. But you know, the technology works and here we are talking to each other. I think I was supposed to be with you a year ago in person, didn't work for all the reasons that we know. But this this set up works and we've had no major resilience, we've had in fact no resilience problems. I can't spot a deal or a hire that we've missed because we couldn't have a face to face meeting. That said there's the consequence of not having that same interpersonal relationship, we're all familiar with that. I've hired two people while we've been in lockdown. I've never met them. I've never seen them face to face. I will see how effective that was.


RUBENSTEIN: So during this period of time, what would you say you learned about your organization that was a bit of a surprise to you, if anything?


WINTERS: You know, surprise, I think if somebody someone had told me that 95 percent of my colleagues in India, which is our primary operation center, Malaysia, Kuala Lumpur, which is our secondary center, Tianjin and Warsaw, which are our third and fourth centers, that 95 percent of them would be working from home all at the same time, I would have said impossible, something will go wrong. And for starters, a lot of the colleagues in particular in India, they didn't have a home computing setup, they didn't have laptops, we didn't regularly give out laptops, because people worked from the office. But we found a way in a matter of weeks to jury rig the systems and in many cases we took their desktops from the office in Chennai, or Bangalore and shipped them home and helped them get set up. But here we are a year later 95 percent working from home still and the resilience is strong, I must say that's a pleasant surprise. It's not unique to Standard Charter. I mean, I think that the way that all businesses have coped with this, and financial services businesses in particular, is stunning and it's a testament to the resilience efforts that we put in before.


RUBENSTEIN: In the United States, all the businesses, large financial institutions included, are struggling with, when do you bring people back to work? How do you notify each other whether they've been vaccinated or not? Should you require that they be vaccinated? What are your policies likely to be in terms of bringing people back, required vaccination and so forth.


WINTERS: In some ways we're fortunate because obviously some of our East Asian markets, starting with China, people have been back to work throughout. So obviously, there's a horrific spike in particular in Wuhan early on, we have a meaningful operation in Wuhan so we had the experience of bringing people back into our Wuhan operation after the lockout was eased there. And then that rolled across, we were similarly locked down in Hong Kong, that opened up, Singapore, Taiwan, etc, opened up. Obviously in many cases now they're back into lockdown again, or something pretty close to it and the protocols are straightforward. I mean, we've soon as there was a sign of a pandemic at all, my Asian colleagues clicked right into speed, working in shifts, so we never had...usually three shifts, sometimes two, we're never at risk of having an entire team forced to quarantine or worse get sick. And the whole sanitization and social distancing regime was pretty quickly adopted and that's what we'll do going back. And we've offered all of our colleagues, this is not pandemic related, this is more just the way that we work now, we've offered everybody the option to work remotely, or at least to apply to work remotely.


Eighty five percent of our colleagues have said that they want to work remotely, at least one or two days a week, some five days a week, some have said that they want to come into the office and the way that we're handling that is we need approval. So there will be some functions that require physical presence, obviously, if you work in a branch, you must be there and I would say most people on the trading floors will be required to work in the office most of the time. But everybody else will have some flexibility, the quid pro quo is you don't get a fixed desk or a fixed office. I've given up my office, I sign up, if I'm coming into the office, I sign up for space, maybe I get the space I've had for the past six years, maybe I get another space, that's fine with me. And that kind of flexibility, I think is the way we're going to work going forward, it also means that you're always ready for the next crisis that could take out a building or take out a chunk of our population.


RUBENSTEIN: So the CEO is giving out his space, you're not going to have a regular office anymore.


WINTERS: Yeah, I'll tell you honestly, David, nobody's signed up for my office yet. I'm waiting for the day, it'll happen.


RUBENSTEIN: Okay, so I think you've publicly announced that you expect to reduce your office footprint and to reduce your number of branches, is that in part because of COVID related realizations you came to, that you don't need all this?


WINTERS: I mean, the branch footprint has been reducing steadily for the past ten years. So as the business digitizes customers need branches less and less, it's not as convenient as dealing through your mobile phone, if it works, and we've got the things working now, pretty much anything you want to do, you can do without going into a branch. So we've gone from sixteen hundred branches to something like eight hundred today and we said that we'll go down to four hundred over the next five years or so. But that's just a trend that's been established for some time. In terms of office space, we'll probably end up reducing our office space by about a third, all else equal—all else being the number of employees—and that's going to come from this flexibility program that I mentioned, people are asking to work from home or interestingly, they're also asking to work remotely. So in particular, in places like India, where the commute maybe an hour and a half each way, colleagues have said, look, if you can give me an office or a little space, a work bench, in a branch that's closer to my home, I'll work there one or two days a week, it would help tremendously with my childcare or it's just safer not to spend an hour and a half on a two wheeler, they'll do that. That obviously all has the consequences of reducing the demand for office space, all else equal.


RUBENSTEIN: Okay, let me ask you this, as an American you recognize what's been going on the United States, that there's been a political resistance political, maybe other reasons as well, for people not wanting to be vaccinated—it's almost a political statement to some extent. Do you observe the same thing in the emerging markets of people who can get vaccinated say, I don't really want to do it for either political reasons, or maybe some fear of vaccination process? What do you see?


WINTERS: Absolutely, I mean, there might be a touch of politicization in the UK, but nothing like what I've seen in the U.S. But in every part in every one of our markets, there's a heavy dose of vaccine hesitancy, in particular in markets that were using, for example, the Chinese vaccines in the early days before they were thoroughly tested. Now, subsequently, I think they are increasingly being thoroughly tested. But we saw in Hong Kong, real vaccine hesitancy, the other obvious thing that's going on is that in many of the markets where we operate in Asia, the infection rates are extremely low. So people are able to go out and restaurants are open, offices are open, businesses are open, the economies have largely recovered. And if you're in particular a young person, you don't feel vulnerable at all in that environment, why get vaccinated? And when they hear stories of people getting sick for a day or two or worse in some cases with some of the blood clotting, etc. Yeah, there's real vaccine hesitancy and I imagine that over time that will that will translate through to a discriminatory system that disallows people from doing things if they're not vaccinated, and that will encourage people back into the clinics. But I think it's a problem everywhere we operate.


RUBENSTEIN: Let's talk about some of the parts of the world that you operate in. Let's talk about India. You mentioned earlier, because of the enormous problems in India now, have your employees been adversely affected or disproportionally affected, has your ability to operate in India been harmed by this?


WINTERS: Ability to operate, no, we haven't missed a beat. And amazingly, the Indian economy, I mean, we'll see what the May data shows, but the Indian economy, in the early stages of this horrific wave, has performed very well and had performed well in the early part of the year and our business is very sound.


That said, yeah, we have one thousand people who are sick, we've had thirty-three people that have died in the last five weeks. The people that have died are young, twenty-seven years old, thirty-four years old, thirty-seven years old, slightly, disproportionately our Grandstaff branches...banking is considered an essential service in India, it is an essential service in India so our branches have to be open. So we've taken every precaution that we can, but that still means a commute in and out of the office or in and out of the branch so they've been disproportionately affected. But most of the infections and most of the diseases is coming within the home. People obviously have to go out and buy food, many Indian families are multi-generational in the house and if one member gets sick with this very virulent Indian strain, the family gets sick. And we project out what could happen to our operations and we think that a reasonable worst case is that 10 percent of our population will be incapacitated at some point in time in the next few months. And we can deal with that, given the rebalancing that we can do to our other operational centers. And the way that we can conduct our business in India. The 10 percent, incapacitated at a point in time with many others being heavily distracted, it certainly has an impact.


RUBENSTEIN: What has been the impact so far in China and Hong Kong of COVID, in terms of your business operations?


WINTERS: I mean, we had a record year in China last year, this year started extremely strong so I would say China is capitalizing on its position as an open manufacturer. Exports have boomed as you've seen and I'd say the reconfiguring of the economy for a domestic resilience, or you could call it...they call it the dual circulation strategic plan, which is to focus on creating a self-contained consumer environment in China, in addition to an export led market. That's been very good for business and the Chinese economy looks very, very robust and I'd say they're past the stage of recovery and into the stage of regrowth. Hong Kong, of course, is different. Hong Kong had the double whammy of a civil protest for a year and then COVID and of course, Hong Kong is also a transit hub, a mobility based economy to a very substantial degree so there's no Chinese tourists coming in, no travelers coming through. The Hong Kong economy had a severe recession. On top of that, I'd say the concerns about the national security law. But it's not obvious from what we've seen that that's impacted the business environment in any material way as yet. But it certainly raised some element of anxiety in the minds of everyone. But that being said, Hong Kong is recovering now, later than China for sure, but it's recovering now and we're as optimistic as we've ever been about the Hong Kong economy and its prospects as the, I suppose, the global financial center, but in particular, a Chinese financial center.


RUBENSTEIN: What about Africa, how's your Africa business fared?


WINTERS: The African business, Africa has been tremendously resilient, the big challenge for Africa actually hasn't been the health challenge, it's been capital. So countries that were already in a stressed solvency position—I'm thinking in particular about places like Zambia—the lack of availability of capital, combined with lower commodity prices for point, although we assume that commodity prices have recovered substantially, or more so in the case of copper, affecting Zambia so debt restructuring has been a big preoccupation. But even despite the prospect of some elements of restructuring, or IMF assistance or things of that nature, most of the African countries that had access to capital markets before still do, including Ghana and Cote d'Ivoire, and Nigeria, Kenya. So we see an impact. I think we expect that there will be additional challenges on the African continent, but they're coping and from a health and sort of day to day life and operational perspective it's been very manageable, perhaps because there's low testing and severe illness is under reported, there will be some of that, but people are getting on with business.


RUBENSTEIN: What about the Middle East, how's your Middle East business fared?


WINTERS: The Middle East had a tough time in the early stages of the pandemic that was on the back of lower oil prices and then obviously a significant drop in oil prices. But—and then the military disruptions in the region, whether it was the war with Yemen or the saber rattling with Iran, and more than saber rattling in a few cases—but that seems to be in the past now. I think the detente between Saudi and Iran, the reopening of the Gulf to Qatar and vice versa, these have been helpful things, obviously, oil prices have come back up. So it feels like the Middle East is back on track, having had a pretty tough time for a year and a half or so.


RUBENSTEIN: So for those who aren't familiar with your bank's history, how did it turn out that a bank that's based in London doesn't do that much business, relatively speaking, in London or even in Europe, but your businesses around the world? What's the history of that?


WINTERS:  Well actually it's two banks, the Standard Bank and Charter Bank, it was Standard Bank of Africa, which was set up in 1860, and the Charter Bank of India, China, and Australia—I think, was the right order—set up about the same time, two different banks, both of royal charters and they were they were set up to serve the trade in the empire, trade within the empire. So Standard Bank was the central bank in most of the Anglophone, or the Commonwealth now, African countries and Standard Bank of South Africa was spun out of Standard Charter Bank at the end of the apartheid period, so same roots.


The two banks came together in 1969, to form Standard Charter and continue to have a royal charter so you know, our bank doesn't have a board of directors it has a court, that sort of thing. Apart from that, I don't think there's too much royal connection. But the bank was set up as an international trade bank, it did have actually at a point, a small, local retail business in the UK, mostly serving the overseas diplomats and trading professionals, the UK expatriates, but that's gone by the by. We have a small private bank in the UK now and of course, we do a lot of business with European, UK and U.S. companies, from offices in New York and London, Paris, etc., but the retail business is not UK.


RUBENSTEIN: So, most people would say bankers are bankers, they worry about numbers and getting your loans paid back and so forth, but do you worry about climate change? Is that a big thing for you?


WINTERS: It's a very big thing, it's a big thing for the bank, and it's a big thing for me personally. For the bank, we are probably as much at risk as any major global financial institution. We're the third biggest bank in Bangladesh and the biggest foreign bank, nineteen of our African cities, with a population over a million people, will be underwater if we have a two degree increase in temperatures, etc., etc. Fifty percent of India will be uninhabitable, meaning half the year over 55 degrees centigrade or 120 degrees, obviously without the same access to air conditioning we have in Arizona, so we're very much at risk to climate change.


Our clients also will have the most difficult time financing their transition to a low carbon economy. Not all of our clients, but many of them certainly in the in the developing countries will. We have an expertise in project financing so we've committed seventy-five million dollars and plus a lot of resources to help our clients transition to a net zero economy. And's a bit of a personal thing, but I was asked by Mark Carney—who is now the COP26 head honcho, appointed by Boris Johnson, but also works with the UN, preparing for, well climate change, but COP26 in particular—Mark, and I have been talking for quite a while about the ways that the private sector can help to solve this climate problem and I've always had the view, going back probably twenty years that with the right setup, private markets could channel hundreds of billions of dollars into the hands of people that could actually make a difference in the environment. But only if we had a good, clean, efficient, and legitimate credible market in carbon offsets. There is a carbon offset market, I've been involved with it for a long time, but it's very small right now. So we set up a task force last summer, in fact, we produced our penultimate report today as a consultation paper gearing up for a final report in the middle of July, that will address the...make the recommendations or actually put the infrastructure in place to have a really substantial liquid, traded, incredible carbon market. And we've got 250 organizations, leading NGOs, the leading emitters, including banks, airlines and steel companies, the leading investors and investor alliances, a large group of NGOs and academics. And we've come together, spent a really, I would say a huge amount of time, coming up with the steps that are necessary to create a viable and credible market. If we're successful then this can be a really important tool in getting to a net zero economy by 2050.


RUBENSTEIN: So you've announced the carbon exchange yesterday with a number of partners, how is that going to work?


WINTERS: So it's interesting. This taskforce is making the recommendations for how this market can work and we're recommending a governance body that can oversee this private sector market. There will be a whole slew of public initiatives, there already are with the European emissions trading scheme or the California exchange. But the idea that we've got is that the private markets need to take these matters into our own hands. There will be many I expect different facilities to originate carbon credits and trade them so what does it originate mean? It means finding those projects, reforestation projects, avoided deforestation, some breakthrough technologies like direct air capture of carbon, or the technology around developing green hydrogen. Those are the things that are going to reduce carbon in the environment, those are the things that are going to produce carbon credits. The people that buy them are going to be people like Standard Charter Bank, or airlines, or shipping companies, where we will do everything we can to reduce our carbon emissions, but we know we can't get them to zero.


In the case of a bank, the bulk of our emissions come from our clients and so we're taking a share of those emissions onto our books. And we can get them down by whatever, 70, 80, 90 percent, we know we can't get to 100 percent reduction, we're going to buy offsets to get the rest. And if the market works properly, all that money that we pay for offsets is going to go into projects that actually reduce carbon in the environment. The Singapore exchange, the climate impact x that we announced yesterday, it's a Standard Charter, DBS Bank, Temasek and SGX, which is the main exchange in Singapore, we're going to create two things, one is an exchange for listed carbon contracts and the second is a marketplace where people, like Standard Chartered or others, can step in and buy offsets from a shopping list and that shopping list will be curated and verified. And we'll have verification monitoring tools so that the buyer of these offsets can have a high degree of confidence that these are good things and not some form of greenwashing, which is, unfortunately, the carbon offset market has been the target of accusations, some accurate probably some not that it's just been a big greenwashing exercise. That's why we're so keen to establish a high standard that is really unassailable.


RUBENSTEIN: Now, what about FinTech? Some people say that banks are being hurt by the advent of FinTech new companies, is your bank being affected adversely, or maybe positively by it?


WINTERS: It's both, but I see it as a net positive, but that might reflect a little bit the position that Standard Charter is in. We're a midsize bank and we don't actually have a natural home market. Our biggest market is Hong Kong, our fastest growing market is China, the bulk of our, or a quarter of our population is in India, and our operational hub is in Singapore, but none of those are our home market. So we've taken the view that certainly in the retail business, we need to be a disruptor in these markets. And the way that we're disrupting is to partner with FinTech companies, and with big tech companies. For example, we have a very small retail business in Indonesia, subscale, many would say just get out of there, in fact we sold a consumer bank that we own in Indonesia last year, sold that to another market player. Rather, what we're doing is partnering with a with the largest ecommerce platform, a company called Bukalapak, and we're delivering a full range of banking services in a completely integrated way through their ecommerce channels. The customer at the end of the day gets a Standard Charter account, but as far as they're concerned, they've got the convenience of dealing with Bukalapak.


And other tech companies are doing this themselves. Ant Financial obviously did that all by themselves in China so we have a different kind of role that we play with Ant Financial. Other tech players, Grab is the Uber of Asia, is trying to do that by expanding into financial services. So it's becoming a hyper competitive environment, banking and nonbanking. Regulation still makes it difficult in many markets for nonbanks to penetrate the banking market. And I think that will persist for some time, because I think regulators and policymakers still see banks as having an important role in credit intermediation and an important role as a hyper regulated store of value. But the competition is extreme, the competition to be the most convenient is extreme, business models will change fundamentally. But I think for those banks that they can leverage that like the competence that comes with being a bank, the knowledge of regulation, the knowledge of customer service, the ability to intermediate complicated credit flows, there's as much opportunity as there is risk from the technology sector,


RUBENSTEIN: Now onto cryptocurrencies, is that something that is a concern to you? Or is that something you think you can participate in in some way and make a profit from dealing with cryptocurrencies?


WINTERS: I think it's a huge opportunity. If you go beyond cryptocurrencies into digital assets, including stable coins, which are also cryptocurrencies, but they're linked to an underlying fiat currency, dollars, or euros or whatever, you look at the way that real assets can be tokenized. And it won't be long before we're buying and selling shares in your tokens of a commercial real estate property or something like that and I think there's enormous opportunities and that there are some threats as well. I think digital central banks are beginning to develop their own digital currencies and the probably the most important is the Chinese, People's Bank of China, digital currency. And you could imagine that if the Chinese are successful, I don't think it's their intent, but if they're successful in creating an easier form of money, then the existing electronic forms of bank money, then why would deposits sit with banks anymore? Deposits will just sit in a government wallet that is perfectly safe and very easy to use. So I think there are some scenarios where you could say that central banks could put the banking industry out of business. But the way I look at that is that central banks can always put the banking system out of business, they come pretty close to it a few times usually provoked by us. But I think as long as governments think that there's value in banks, banks will be okay and in fact, there are huge opportunities in the digital asset space.


RUBENSTEIN: Now, your bank is not predominantly focused on London and/or Europe, but I'm just curious, as somebody who lives there and has lived there for several decades, what do you think the impact of Brexit is going to be on the British economy and on the European economy?


WINTERS: Yeah, I don't think it's a good thing for either, but both will be fine at the end of the day, both will recover fully. I think the consequences are quite small for Europe, because the nature of the trading relationship that so far it looks like the UK and Europe have struck, is one with pretty much uninterrupted flow. I mean, there's some inconveniences, but none that can't be overcome. I think for financial services it's quite difficult. The hope certainly was that the UK and UK rules would be accepted as equivalent in Europe in the same way that, for the most part, U.S. rules are treated as equivalent, but that has not yet come to pass. So banks like us and other banks that are very affected, we've incurred lot of expense, there's some friction costs, it's a little bit challenging. In terms of impact on London and the City of London, there have been some jobs that have moved and there will be some jobs that won't come here that would have otherwise. But London's a super resilient place, it always has been and we'll find that there's plenty of things that still work in London, let's just take sustainable finance as one of the growing areas of international finance, so London will be okay. You know, Paris and Frankfurt will be a little bit richer. The citizenry of both countries will be...or both entities will be a little bit poorer as a result of this, but we'll all move on.


RUBENSTEIN: The Chinese government has been more actively involved in let's say overseeing some of the technology companies that are so large in China. Have they done things that oversee you more than maybe before and your business? Is it tougher to do business in China now for you than it was ten years ago?


WINTERS: Yeah, just on the first part of what you said, David, the big Chinese ecommerce platform, Alibaba, Tencent, and to a lesser extent JD and others, have benefited tremendously from what I think we could only call regulatory largess in the early days. So the big tech companies in China were able to do things that Amazon and Google were absolutely not able to do in the United States or in Europe. They became very, very big and very, very powerful. I wouldn't say, because of regulatory laws, although that certainly helped them to get there. And if you thought Amazon or Google did just fine without any regulatory charges, but that now the crackdown is coming. And then these guys became extremely powerful, monopolistic, and their behavior, which obviously there will be questions about that in other parts of the world as well. And systemic in terms of the reliance on those two big tech companies, for payments and in the financial markets more broadly. So there's been a real regulatory crackdown and I think at the natural come out, the back end of it is pretty much fine and in good shape.


The value may be a fraction of what it might have been otherwise, but still extremely powerful, because they've got a good proposition. And the proposition is that they offer customers convenience of financial services together with other products. The Chinese with foreign financial institutions have always been...I would say the Chinese with all financial institutions have been a pretty heavy handed regulator, very involved in very extensive reviews, severe penalties for violations of regulatory breaches, that's always been the case, I don't think foreign banks are discriminated against in that sense. Where we have been discriminated against as a practical matter is we just weren't able to grow as quickly as a local banks. At a time when branch banking was important, we could only get up to 130 branches in China. Now, branch banking is much less important today. But nevertheless, we're sitting at 130 branches versus 30,000. For some of the large Chinese banks will never have the same presence they do in the retail market. So like all industries, and in fact, like banking in many countries, the foreigners are kept on a pretty short leash, but not much more so than would be the case with Chinese banks in terms of day to day operations.


RUBENSTEIN: So in the United States many banks and financial institutions and many corporations and other entities are focused on diversity, equity, and inclusion, is that as much an issue of concern and interest in Europe and around the rest of the world?


WINTERS: It certainly is and in Europe, absolutely, in Asia increasingly, and in some cultures in Asia, I'd say that there's something of a head start. And there was a point, two or three years ago, when most of the big Indian banks were run by women, for example. The CEO for Standard Charter in India is a woman. She' fact the CEOs of our Chinese, our, until recently, our Singapore, our Hong Kong operations, and others are women so it's a huge area of focus for us. Diversity for us of course, is gender, we have public targets of hitting 30 percent of females in our senior management, and we accomplished that in January, actually, of this year. Obviously some will say 30 percent, you know that's [inaudible] percent of the population we're getting there, likewise on the board. The UK is every bit as focused on I would say gender diversity as any other place in the world.


For us though, diversity goes beyond gender. And so for example, we were the biggest, yeah, we're the biggest by far international bank in Africa. We have no Africans on my management team. We had one African on our board, Ngozi Okonjo-Iweala, of course she's gone off to be the head of the WTO. And she'd been replaced Maria Ramos from South Africa, but in the management we're under represented, and we're under represented mainland Chinese or ethnic Chinese, in our management team as well, or in senior management roles outside of Asia. And this is that that sort of cultural diversity that's critical for our bank that we haven't perfected yet, but we're very focused on it.


RUBENSTEIN: So you've been in the banking world for quite some time at JPMorgan and Standard Charter what's the pleasure of being in the banking world? And how do you compare the cultural difference with being an American bank and the bank that you could say is British in terms of its background?


WINTERS: Yeah, you know, I loved my time at JPMorgan right. It's a fantastic place. Every day was a new learning experience. Not every day was easy, but it was and no doubt is a fantastic place. When I left at the end of 2009, beginning 2010, I had no desire to extend my banking career. I mean, I enjoyed, I had a good time. The idea of going in and restructuring another investment bank didn't seem like a lot of fun, even though I might have had those opportunities at that time. I set up an asset management business, which I loved, had a great time, and truth be told, I found it a little bit narrow for my interests. I loved the diversity of challenges that come from working in a big organization. And I wasn't looking to go back into banking. In fact, I had specifically not looked at going back into banking, but I got a call from Standard Charter, they said, what do you think? And I just thought about it a bit and said, well, this is about as different from JPMorgan as I can get. For one, it's relatively small, half of its retail. It's not an investment bank, although there's a big corporate banking and parts of investment banking operation. And it looks like a great...I knew the bank pretty well, but it's a great bank that had fallen on hard times, I thought maybe I could make a difference.


And I must say, while people will question my timing, I mean, I joined just before the RMB devalued and, obviously yeah, we've had, you know, small things like a pandemic, and zero interest rates that are really not good for banking in a particular bank like ours. But nevertheless, I've enjoyed every bit of it, job not yet done so I’ve got to stick with a little while longer. Culturally, there are big differences, but the biggest differences, I think, I was surprised by how hyper regulated this Standard Charter UK bank is. What I think I missed was, in my five years of working in a nonbank, all banks have become hyper regulated, and whether it's the stress testing regime in the U.S. or otherwise. So that was a big change and a big shock. But I don't think it's unique to Standard Charter.


RUBENSTEIN: So final question before we take question from our members. Because you've been living in London, you're doing this bank, which is very heavily involved in places like Africa, or India and so forth. Have you had to take up cricket? And do you understand cricket? Or you still like baseball better than cricket?


WINTERS: I have not taken up cricket. I don't understand almost anything about cricket. I have developed a fondness for soccer, football. In fact, Standard Charter is a sponsor for Liverpool Football Club. So I got to Anfield Stadium, and I could give you the names of a half a dozen players and recite a few statistics. It's a fun game. I've kind of lost touch with my baseball past, I have to confess.


RUBENSTEIN: Okay, why don't we take questions from our members now. Can you direct the questions, please?


STAFF: (Gives queueing instructions).


We'll take the first question from Yves Istel.


Q: Hello, thanks very much for the great world tour. Could you comment on the credit situation in China? There's been a lot of comment about the problems there. Do you feel they'll be, as they have in the past, contained in China or they will have effects elsewhere? And in general, any comment on that situation would be great. Thank you.


WINTERS: Thanks. It's a really big and important question. I think, in aggregate, the Chinese debt burden is perfectly manageable, especially in this very low rate environment. And I say in aggregate because if you take the federal level debt and plus the state owned enterprises, plus the provincial level debt, plus the municipal level debt, you get to levels that are that are higher than you would see in the U.S. or in Europe. But those same entities also have access to assets that are much greater. For example, they own the land, and land and housing and property are still booming markets in China. Obviously, the state owned enterprises have value in addition to having debt. So in aggregate, I think the Chinese debt problem is manageable.


There was a time when I would have been more reserved in that answer, two or three years ago, when the shadow banking system in China had become very large very quickly. And we all know, from our own experience in the west, what happens when an unregulated financial market gets very big very quickly. But the Chinese in uniquely Chinese fashion, having become concerned about that themselves, pretty much shut it down in two years. Interestingly, this had a pretty big impact in terms of economic activity. So part of the drop in GDP growth in China was a consequence of small businesses no longer being able to access credit from these nonbank institutions that had been shut down quite quickly. So a lot of pressure on banks, generally, the local policy banks in particular, to step up business lending to small businesses. But overall, I think the depth dynamic is manageable in China and they've managed through this COVID crisis in relatively good physical shape. So their fiscal outlay relative to the UK, for example, where the fiscal outlay is enormous, or the U.S., depending on what comes through with the current proposals going through Congress, the Chinese have added much less to their deficits. As a second part of the question which might be what about Chinese lending to all of these Belt and Road economies or African countries? Have had the Chinese set a debt trap? The Chinese seem to be working through the restructurings in a responsible way. So they're engaging directly rather than through things like the Paris Club. But they seem to be prepared to accept sort of reasonable restructuring terms, the way that we're seeing in other economies. And I would say, maybe better than seem to be, that they are proactively trying to be good citizens in what otherwise could be quite tricky situations in some of these developing countries.


RUBENSTEIN: Thanks. We have another question lined up.


STAFF: We'll take the next question from Tom Glocer.


Q: Hello, David. Hello, again, Bill. I wanted to go back to the theme of the PBOC's ongoing digital currency experiments. So going out, far into the future, do you ever see it being a threat to the reserve currency status of the dollar, or just a possible alternative payment mechanism to allow some countries to get away from the ability of the U.S. to use financial sanctions to achieve diplomatic political goals?


WINTERS: I think it is both those things. But the U.S., by the way, hello, Tom, thanks for the question. I think the US dollar is so firmly entrenched as a reserve currency for so many good reasons. The depth and openness of the of the U.S. capital markets, the ongoing credibility of U.S. law, the I would say, broadly, the responsibility of U.S. policymakers—we can debate whether it's been the case in specific instances—but broadly, the U.S. is an extremely credible player on the global stage. So I think it's going to be very hard to dislodge the dollar anytime soon.


That said, I would imagine that China is very keen to wean itself off of its dependence on the U.S. dollar for its own trade in much the same way as they'll be keen to wean themselves off dependence on us technology and other things in this world where tensions are high. I think the PBOC's digital currency is one tool in that basket. And maybe if we could talk about this forever, we don't want to do that, we don't have the time for that, but the RB is not fully convertible, the Chinese currency is not fully convertible. I will wager a bet that the ECNY or the digital currency coming out of the People's Bank will have convertibility features that are different than the RMB broadly, and it will initiate—this is pure speculation on my part—but here's my here's my wager, it will begin in the greater bay area, so that's that Guangdong Province, Schengen, Guangzhou, Hong Kong, Macau. It is a distinct policy area that's been promoted heavily by Xi Jinping to have an economic zone that has an international border and not from a country perspective is all China. But from an economic perspective, Hong Kong and China are not part of the same economic bloc today, they will be increasingly in the future and I bet that the way that money moves back and forth between Guangzhou province and in Hong Kong is with a digital currency. Why? Because then it can be contained inside the greater bay area and doesn't escape to create currency convertibility throughout all of China, which the Chinese, for their own policy reasons don't want to do. Once you've got that element of convertibility built into that, that programmable digital currency, does it become a more effective medium of exchange for trade, or for investment or other capital flows? Absolutely. Does that contribute to the undermining of the US dollars reserve position, maybe over a very long period of time. But as I say, the dollar is so well entrenched that that can't be a short term objective.


RUBENSTEIN: Ok, next question.


STAFF: (Give queueing instructions again)


We'll take the next question from Alexandra Cart.


Q: Hi, thank you, Alexandra Cart with Trofi holdings. Considering your business in the emerging markets, can you speak to developments in FinTech and how you think about innovation in your business over the next several years?


WINTERS: Yeah, it's a big preoccupation for all of us. So we have a...I would say we have innovation embedded into what we do day to day. So we set out on a mission when I arrived really, so six years ago, digitizing everything that we do from end to end, we're pretty good at that now. So in India, if you have your national ID you can open up an account in about six minutes and start moving money immediately afterwards. So that's just ongoing and you may say that's table stakes and banking these days. But we're trying to innovate within our core business all the time. But we set up a separate venture lab as well and an innovation lab we call it SE Ventures that does three things. One is to support innovation in the broader part of the bank, second is to invest in FinTechs, typically where we have a strategic relationship. So we partner today with about, I don't know, the exact number, maybe 500 FinTechs. They provide one form of service or another. In many cases, we partner with them at a very early stage, we see that they've got something that's valuable and we know that we're helping create that value by becoming their anchor customer. So we take a stake, 5 percent, 10 percent, that's been quite successful. And I don't think it's unique to Standard Charter, but it's been very successful for us. And then the third arm of this venture lab is building ventures from scratch.


So for example, we built a digital bank in Hong Kong, the Hong Kong government said they're going to hand out virtual bank licenses, virtual bank meaning you can't have a branch, it's got to be separately capitalized, separate banking license, same regulations as a bank, but it can only operate in digital form. That's our biggest market, although we're not the biggest player, we're sort of tied for second—HSBC is the big guy in Hong Kong by a lot. And we've asked ourselves the question, do we do we want to try to disrupt part of this market? Or do we want to try to hold on to our 10 percent market share and resist the attackers? We took the view that the market will be disrupted, so the disruption should come from us so we built it back from scratch, brand new technology, Standard Charter technology is used only where it won in a head to head bidding contest. It's been a huge success. So we've got about 3 percent of the population of Hong Kong signed up in the first five months, we've got over a billion dollars of deposits and sort of App Store ratings that are 4.8, or 4.9, on a scale of 5, which means it's amongst the most popular banking apps in the world. We're now going to take that and drop it into Singapore, assuming we get some sort of final approvals on the license, perhaps other markets. So this sort of build it separately and then then bring it back into the main business is another part of our strategy. People look at us and say, well, you've got a lot of things going on, you've taken a lot of different approaches, surely you could just focus on one thing and do it right. I said, I think that would be a mug's game. Innovation means you, have to maybe not let 1000 flowers bloom, but you have to let at least 100 flowers bloom.


RUBENSTEIN: Ok, Bill, let me ask you, in the United States, the CEO of JPMorgan or Citi or other major banks, they will very frequently meet with the President of the United States on important occasions, and sometimes they'll meet with the head of the Fed. Do major bank heads in England get to meet with the prime minister or with the head of the Bank of England? Or is that just not as common there?


WINTERS: I don't know if it's more or less common, but it happens. I was on a zoom call with Prime Minister Johnson the week before last week and you can you can look it up on Google because I can tell you Downing Street promoted it, but interestingly, also on that call was Jamie Dimon. I think there were seven of us, but Jamie Dimon was there and Bill Gates was there, and Sunil Mittal who runs Bharti Airtel in India, all have big businesses in the UK. But, you know, the Prime Minister's objective was to position for the post-pandemic, post-Brexit economy, and he wanted to reach out to business and did so. Active dialogue with the chancellor, we meet with the Central Bank Governor, Andrew Bailey, every week with bank CEOs. So I feel like we certainly have access to the levers of power, probably less so than ten years ago. I think the financial crisis did change things, you know, banks became pariah in the UK, as they were in other places. But in the UK, there's still an element of I mean, maybe real estate brokers are lower on the social pecking order the bankers, but we're pretty close to the bottom and that's still the case in the UK to some extent.


RUBENSTEIN: So is the Federal Reserve more important, even though you're not regulated tech, typically by the Federal Reserve, to your big global operations, than the Bank of England or is the Bank of England more important to you than the Federal Reserve?


WINTERS: So from a macroeconomic perspective and a monetary policy perspective the Fed is more important, I mean we're a dollar based bank, the bulk of our balance sheet is in dollars. We're also the...we're the second largest, clearer of U.S. dollars of any foreign bank and seventh largest overall. And that's, as you know, heavily regulated, not so much by the Federal Reserve, but by FinCEN and then, if you cross a line, by the Department of Justice, so the U.S. political and regulatory establishment is extremely important to us. But the Bank of England is our regulator, through the Prudential Regulatory Authority, which is which is part of the Bank of England and as our lead regulator, they have tremendous sway. The Fed also regulates our business, certainly, in particular, our U.S. business, but the Fed and the PRA work extremely closely together and I think it's safe to say that we're effectively regulated by both.


RUBENSTEIN: Now you are operating in many former British colonies, but what about one colony called the United States? You don't really have a big business here, is that just not something you want to take on?


WINTERS: No, no, it's pretty big. I mean, it's not like the U.S. banks, but our corporate business is about 60 percent of our overall business. And a third of the corporate business comes from Europe and the U.S., roughly evenly split. So roughly 15 percent of our overall business is in the U.S. We also have a very large dollar clearing operation, we've got the better part of one thousand people sitting in San Francisco in New Jersey, who are clearing dollars for U.S. companies, but also for companies around the world. So we got a couple thousand employees in the U.S., anchored in New York on Sixth Avenue and it is growing, it is the fastest growing part of our global client footprint interestingly.


RUBENSTEIN: We have another question lined up, can you go ahead and ask her a question?


STAFF:  We'll take the next question from Rachel Robbins.


Q: Hi Bill, nice to see you, a voice from the past. So Bill, you talked about climate change and the importance both for you personally and for the bank. Can you talk about impact investing? And is that something has been growing exponentially. What do you see in the future? And what are the impediments to further growth?


WINTERS: It's great to hear from you, Rachel, sorry, I can't see you, but maybe one day. We don't have an asset management division so my Standard Charter experience with impact investing is coming through the people that own us, or that could own us. There's been an exponential increase over the past three years and focus on I would say ESG broadly, sustainability in particular, but absolutely not limited to sustainability. And I'd like to think that we were ahead of the investor movement, at each step along the way, that would probably be naive to say that we were ahead because there was always somebody that will be ahead of us. But we've been moving with investors, But should we indicate a reluctance to move forward in terms of accommodating the impact investors, we would feel it very directly through shareholder action and eventually through our stock price, I have no doubt about that. So I think the substantial increase in focus on impact investing is making a real difference in the corporate world.


I'll give you one short anecdote, I made the mistake of sharing this with a group of investors. They were going on about...all the big investors in the world were at some conference, and they were going on and on about their focus on impact investing and I said, like, that's great, but I have about fifty meetings a year with shareholders, and not one of the portfolio managers that works for you guys, has ever asked me about our ESG policies, our actions, our sustainability plans, whatever. That was two years ago. There's been an onslaught since then, did I invite that onslaught by making that comment? Maybe, but really, I think it's just going to shift in focus that it really is important now and it's making a difference.


RUBENSTEIN: So Bill, you're like a Yankee in King Arthur's Court in some respects. You're an American working in a British bank. Is there any advantage or disadvantage to being an American working in a British organization and England? Do you see any benefits or prejudice, or basically it doesn't make a difference?


WINTERS: I haven't noticed a difference, but I'm probably a bit naive and a bit thick skinned and there's probably been all sorts of jokes at my expense. I mean when I first arrived in London, I wore my cordovan loafers and somebody said, you know, gentleman in Britain wear shoes with laces and trousers with braces, so you know, get your act together Winters. But that was 1993, that might be almost the last time that I got one of those, since then it's just been behind my back.


RUBENSTEIN: Okay. And while the British bankers still wear ties, generally, or not so much? Three piece suits or that's gone too?


WINTERS: [laughs] I think the bowler hats and the three piece suits are gone, we still carry umbrellas.


RUBENSTEIN: So, you know, for somebody that's thinking of a career in banking, why would somebody, why should somebody want to go into banking, what's the pleasure of being in the banking world versus something else? And if you look back on your career, do you have any regrets that you didn't go into something significant, like private equity or something like that?


WINTERS: Well, I dare say had gone into private equity, had I been successful, which is a big question, I'd probably be richer, but you would know that, David. But no, I don't have any regrets about banking. I fully intended to be a diplomat, relevant for this audience perhaps. I studied international relations. I was accepted into graduate programs in international diplomacy, that's what I was going to be, I just needed some cash and JPMorgan was available at the time. But it I got hooked early on, I enjoyed sitting outside the client as it were, and then helping them to get their business done. Later in my career, I've enjoyed helping to run a business and it's very eclectic and very diverse, fantastic learning experiences, completely international, I'm certainly getting the international exposure that I hoped for in forlorn and forgone, diplomatic career and I think the young person today can get the same thing. It helps if you're relatively technical today, which I was not when I joined banking, maybe a little bit more so today, but I think it's a great career path for a young person, it's not for everybody.


RUBENSTEIN: You recommend it to any children you have, or...?


WINTERS: I recommended to my children that they try something different. My daughter took the advice and she's an actor, and my son who is still in university, I am afraid to say is drifting towards finance. But I don't know whether it will be in a big bank or not.


RUBENSTEIN: Okay, let me ask you one final question before we wrap up. I'd just like to ask you, on the whole, when you look at the challenges your bank faces in the future and you look at the opportunities, how do you weigh whether the challenges are greater than opportunities, the opportunities are greater than the challenges, and what keeps you up at night when you're running a bank as large as yours?


WINTERS: I joined a bank that had really fallen on hard times, so we had to write off a quarter of the equity in my first year and then fill it up with a capital risk and it turned out that the operational problems were quite challenging as well. I think we probably should have cleaned it up in the first four years, I think we probably actually did clean it up in the first four years, but the pandemic set us back a bit. So you always worry are the investors just going to lose patience along the way, even though we can explain away some of the challenges. But we've made really good underlying progress. We're operating in the most exciting markets in the world, I think the China sphere, and then playing that bridging role between China and Asia and the rest of the world, which is what we do, I think is just the perfect place to be. We're extremely well positioned for that, we've got good technology, we've got good people. So I see the opportunities outweighing the challenges. But it's not to say we don't have some challenges.


RUBENSTEIN: Okay, Bill, I want to thank you very much for a very interesting conversation. I appreciate your giving us this time and I'm glad that our members tuned in. And so Bill, thanks very much. Appreciate it.


WINTERS: My great pleasure, David. Thank you. 



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