STANDARD Chartered yesterday began to reap the benefits of a strategy put in place by Mervyn Davies, who replaced Rana Talwar as chief executive in November 2001.
Mr Davies almost immediately reversed much of the strategy implemented by his predecessor. The former chief executive had raised money from shareholders for a series of acquisitions in emerging economies which were then recovering from the 1998 Asian currency crisis.
Mr Talwar believed bargains could be found in the wreckage. When Mr Davies took control, he took the bank down an altogether different path.
He temporarily abandoned the acquisition strategy and instead concentrated on rationalising costs — consolidating the bank’s processing in two service centres in Kuala Lumpur and Madras.
He decided to tilt the bank away from the wholesale banking markets and towards servicing the growing band of wealthy consumers in the emerging markets. He also sought diversification out of the Hong Kong market.
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In addition, he bought back shares. Despite yesterday’s share sell-off, analysts argued that his strategy is showing signs of working, with strong gains in India and the Middle East.