Standard Chartered CEO: Global Banking, Geopolitical Shifts and the Future of Blockchain

0:01Hi everyone, I'm Nikolaj Tangen, the CEO of the Norwegian Southern Wealth Fund. And today I'm joined by Bill Winters, the group CEO of Standard Charter Bank, one of the world's most distinctive banks. Headquartered in London, you have most of your activities in Asia, Africa and the Middle East. And we own more than 2 % of the company worth a billion dollars. We are really proud shareholders.

0:31So, Bill, the bank opened its first offices far away in Mumbai, Kolkata, and Shanghai in 1853, a long time ago. And you've been CEO for 10 years, which is only 5 % of the duration of the bank. So tell us, what is it that makes Standard Charter so special? Yeah, first is Gritty Beer. Thanks for having me. So you're right. It actually started as the Standard Bank of Africa, which started in Port Elizabeth in South Africa, today South Africa, and the Charter Bank of India, China, and Australia, which first branched in Kolkata. And obviously, at the outset, it was two banks. It only came together in 1969, still a long time ago, but to finance the empire.

1:13It was to finance trade within the empire. And those are still our roots. People sometimes refer to us as an emerging markets bank. That's not quite right because we have big operations in the US and Europe. And I'm not sure that places like Hong Kong and Singapore are emerging markets anymore in any case. Or they refer to us as a trade bank, which is true. We are a trade bank and the second largest trade bank in Asia, of course, which is the biggest trading center of the world. But really, we're a connector bank. We just connect markets to markets and people to people because we have multiple home markets.

1:43And what attracted me to Standard Chartered was this unique culture of being a connector with no single home market. Of course, the UK is our home market in many ways. It's where we started and where we're headquartered. Hong Kong is our biggest single market. Hong Kong, China, which is increasingly a single market, is by far our biggest profit source. Singapore is our major operational hub. India is our operations center. And then we're a big bank in India as well. But who are your clients then? Our clients, so roughly two-thirds of our businesses are corporate and institutional clients, including governments.

2:17They're almost all multinational. If they're not multinational, they don't really need us. And of course, we can deal with some local clients as well. But for the most part, they're multinational. They have some cross-border nexus. One-third is retail. All of the retail is Asian, Middle East and Africa. But the corporate is truly global. And the clients use us to connect them to markets and investments. Why are you still headquartered here when you've got all your activities so far away? Yeah, it's a question. It's a good question. It's not the first time you've got it. No, not the first time.

2:47Do you know what? When we reflect on this from time to time, we say, first of all, we're quite a complex bank, difficult to regulate. And the UK regulators are extremely sophisticated. So they've been managing global banks for a long time. So especially for us, we deal actively in financial markets and derivatives and things like that that are quite difficult to regulate actually. So the PRA Bank of England is extremely sophisticated. Second, the UK has always been a fantastic financial center. So it's got the underlying infrastructure. It obviously a good time zone because we're active throughout Africa and in the West, Europe and America is where the UK is fine.

3:26But our name is on the banknotes in Hong Kong. Our largest shareholder is Tomasek in Singapore. We don't ever want to have to choose between the two of them. So that's, and you can think about some other location. Today, Singapore and Hong Kong could regulate us because they've become extremely sophisticated regulators as well. 20 years ago, I'm not sure they could. But in the meantime, we're firmly entrenched here. So now I'm an international company and I've got businesses in all these places. What do you do for me? We take care of your local operations, financing for your local operations in countries where in some cases we'll be the only bank that you could deal with.

4:07In others, we'll be one of the few international banks that's truly local. So we're going to take care of your business in those local markets. We're also going to connect you to local players who may be part of your supply chain, or they may be your distributors, or they may be your partners, or one day they may buy you or buy part of you. So for the multinational companies, we're offering them access to these local markets.

4:34When you took over the bank 10 years ago, the state of affairs were very different. What did things look like back then? I had left banking at that point. I'd worked at J.P. Morgan. I had set up what today we would call a private credit fund. Then we just called it an asset manager. It was fine. It was a good life. You know the asset management life. It's a good life. Not always, but some... I'm going to say it's a good life. That's how I remember it. And then I got this call from Standard Chartered. I knew the bank pretty well from my time at J.P. Morgan because Standard Charter was a client and a partner.

5:05They were still clients and partners. And the chairman said, we've got a problem. I said, I'm aware that there are some problems. But he said, I think we've got a really good underlying franchise. And we just need to clean it up. And the problems that were very clear at that point were compliance problems, largely with the U.S., but also with the U.K. and elsewhere. But it was also clear that there were some credit problems. I don't think anybody was aware how substantial the problems were. And I wasn't when I arrived, I have to confess, despite my due diligence. How bad were they? We wrote off a quarter of the book Equity of the Bank and had to fill that up with the Reuters offering, which took the share price down.

5:40It had peaked at almost double the price that it was at when I was announced, but it dropped by another half again. So that's now 75 % down, peaked a drop. So that's, yeah, but the bet I made, which I questioned at a few points, but fundamentally I'm sure today was right, was that there was a really good underlying franchise with a really interesting and thank you for calling us distinct at the outset. That's a it's a neutral term. It could be distinctively positive or negative, but it is in fact distinct. It's a positive now. It is a positive now. And people have wondered at times whether it is a positive because sometimes it's expensive to be distinct or it's tough to get to scale when you're distinct.

6:17But I took the view that we were distinctive and that that distinction was a strength and that we could leverage that strength and that we just had some problems that we had to clean up. So first day in the office, you come in there and it's just like, hi guys, Bill Winter, I'm coming to save you and let's have a look at the books. Wow, not so good. Write off a quarter of that. Have to take in some new capital. How do you go about fixing something which is so big and complex? We took a little bit of time. I had the luxury, first of all, of having three months between the time that I was announced and the time that I started.

6:52it. So I was just an observer. I was also selling, as it happens, my previous business. I was on the board of some other companies that I had to step off. So it took a little bit of time to transition, which gave me a chance to understand without having to make decisions. So by the time I started, three months after announcement, I was pretty familiar with the bank. We could get right down to business. The first order was to pick the team, actually, even before we dealt with the problems. and there was one person that had been on the previous executive team that we carried over. About half the people that formed the core team at the outset came from inside, but we bumped them up an organizational level or two, and the other half came from outside.

7:34It took a little bit of time. During those three months, how many people did you meet with? Oh, hundreds, hundreds. You were working inside the bank and meeting people. Yeah, I was in almost every day, and I took weeks on the road to go visit the key centers in Hong Kong, Singapore, Dubai, Seoul. And how do you pick the people? How do you see who's fit? You know, when I reflect back on that period, I didn't have a 100 % success rate, but I'm surprised that the initial instincts were as correct as they seemed. And what were you looking for? First and foremost, I was looking for integrity. There had been, I would say, very substantial control lapses in the company.

8:14It wasn't completely clear whether all those control lapses were completely honest and I don't have a lot of evidence that there was a lot of dishonesty But there were some bad examples of self-serving behavior I thought and that had got I think that contributed a lot to the to the state of the company at the time And I wanted to make sure that we had a team that was completely focused on the team and not focused on themselves How many people did you bring in from the outside? Right the first hire from the outside was a chief risk officer and which was a really natural place to start It brought in the head of our corporate bank, came from outside, whereas the head of our retail bank I promoted from within.

8:48The bank actually had just hired a new CFO before I arrived, who had a very experienced CFO from Vodafone, who obviously stayed. And they had just hired a general counsel to basically clean up some of the mess with the US authorities in particular, who was also very strong. So we had some good endowments at the outset. And in fact, the bank had just hired a head of technology and operations who started the same day I did. But what I found was that the talent in the bank was actually very, very good and much of it long-serving, and they understood what was really good about Center Chartered and what was not.

9:23But I also realized that that group of people, they were shell-shocked because a little bit of the history of Center Chartered was just three years earlier, they were the darling of the city, trading at a multiple of their book value and had subsequently dropped down to something around book value. It subsequently fell down to 30 % of book value. But in 2012, they were heroes and told that they were great. And very big investors came in and put a lot of money with the company at a very high price saying, you guys are great. Including us? I don't think so. I think you were much, much, much more astute at the time.

10:01But no, Nourjus was involved, but I don't think outsized at the time. When you come in there and the bank is in trouble and you're like a fallen star and you're a new person, how do you communicate with shareholders? What are the key things and key messages? You know, the very first and most important communicators were with regulators because the bank had lost the confidence of regulators. And so my first interactions were just to be very clear that the regulators actually were the very single number one priority, even at the expense of shareholders. Not because that can sustain for any period of time, but because that was necessary for existence at that point.

10:37Stupid question. Why is it important to be friends with the regulators? Because regulators give you your license to operate. And without the support of the regulator, you can't operate. There were questions back in 2012 when Standard Chartered was first identified as having violated some of the financial crime rules in the U.S. There was a question whether the U.S. would remove our banking license. I don't know how close that ever came, but it was certainly considered. And a bank without a banking license, that's not a good place to be. It doesn't exist. It doesn't exist. Not necessarily in every country, but if that country is the United States and you're one of the largest clearers of U.S.

11:14dollars, and that means you can no longer clear U.S. dollars, it's essential. But how do you communicate with shareholders? What do you tell them? Do you tell them your dreams or your plans or your specific targets? How do you do that? So I gave shareholders my assessment of why I took the job. And it was pretty clear, I think, to anybody I was speaking to that I didn't have to take that job. I wasn't an internal person that was brought in to carry on. I dropped a really nice, comfortable life outside to go do something new. And I explained why. And I explained that I thought that the underlying franchise was a super franchise, that we had some problems, that we could fix them.

11:53I had been at J.P. Morgan at the time that J.P. Morgan sold itself to Chase. that bank, JP Morgan Chase, which is hard to imagine today, given how powerful that bank is, had a really difficult time in 2001 on the back of the bankruptcy event around and WorldCom and other associated failures during that, the dot-com bust and other things. And we as a team pulled together and fixed that bank. You know, Jimmy then came in four years later, I guess, and then continued to fix the bank. And obviously, it's taken it down to what it is today. So I had some experience with really bad situations, with really bad relationships with regulators that had worked out really well for shareholders.

12:31And I tried to play on that history. When did you first start to think that everything, hey, now things are going well, where you sorted it? Well, interesting, when I thought things were going well, it was a little bit different than when the market thought things were going well. So we took really severe medicine in 2015 and 16, both management and and financial. I think 17 and 18 were definitely rebuilding years. We also had a big technical deficit, so technology gaps, obsolescence that needed to be closed. I was feeling very good about things in 2019. And we had set at the outset three-year performance targets as we all do, and performance plans were linked to that, so it was all public.

13:11And the big delivery year was going to be 2019. As it happens, we fell a little bit short of the targets in 2019, largely because interest rates had fallen relative to what we expected, but we were on track. And so 2020 was going to be the delivery year. That was not reflected in the market at all for us at that point. Not long enough to be too frustrated. We know what happened in 2020 with COVID and interest rates going to zero, which is very bad for any bank. It was particularly bad for our bank at that point. So for two years, we had to kind of tread water with continued to progress, but it was not very visible.

13:50So I felt things were in good nick in 2019, but I don't think the market finally came around to that view until probably 2022 or 23. What took us along? COVID was two years. We had a credibility gap, which I think was the credibility gap that came from the problems in 2014, 15, 16. We're relatively small, so that not every investor has to spend a lot of time understanding a relatively complex bank like standard chartered. And so I think there's a very wise shareholder, actually non shareholder, but a portfolio manager, a very large asset manager who said, you know, the way this is going to work is, you're going to have to outperform for two or three years before anybody really pays attention.

14:33And then people will crowd in. And I thought, and he probably said that to me 2018. I thought that was a little bit histrionic at the time. It turns out, I think he was exactly correct. Which, you know, I don't think it would necessarily be the same if it was a much bigger bank, even a bank like HSBC, much bigger than us, similar kind of business profile. But they're in the indices, they're in all the indices. You can't not own HSBC. Or if you don't own HSBC, you have to be very aware that you don't need. You cannot own a standard charter, and it's not going to fundamentally change your portfolio.

15:08If you were to take over a bank in the same situation again, what would you do differently? But the biggest mistake I made, and it was a big one, was to not realize that the risk appetite inside the bank had already collapsed before I arrived. So I showed up on day one. I saw many indicators of loose controls on the compliance side, on the conduct side, and then on the financial side, so credit losses. And I hit the brakes hard. And that was, I overdid it. And I overdid it because I acted before I investigated. So the indicators were very negative. And so I said, you know, this is, you're out of control.

15:44Basically, you can't do anything without my approval for a little while. And they were already scared to death. But they were already scared to death. And they had been scared to death for six months. So, you know, the balance sheet shrunk by the better part of a third in my first year. Probably half of that was unnecessary. I may be a little bit harsh on myself on that one, but I think I overindulged on the risk messaging. and maybe even more harmful than the damage that did in the short term was that it meant it was that much harder to get out of that risk-averse position. What were the most important things that you took from your time at J.P.

16:21Morgan to bring into this bank? J.P. Morgan was several different banks in my time there. I started there in 1983. It was a U.S. commercial bank, but a very preeminent U.S. commercial bank, but a commercial bank. And then Morgan Stanley and Goldman Sachs were these other things that we just heard about. shortly after I arrived, Lou Preston, legendary leader of JP Morgan, who went on to run the World Bank, said, you know, we've got to make a decision. Do we follow our clients into the products that they're pursuing, or do we follow our products into a new group of clients? And that was because our clients were going to capital markets, which we, as a US commercial bank, were unable to access because of the Glass-Steagall Act.

16:57And Preston said, prophetically, we will follow our clients, and therefore we need a new set of products. So we developed some conventional investment banking products like debt and equity capital markets, first debt and equity, but then also gave ourselves license to get into some new areas like the very early days of the derivative markets. So the first big lesson was, ask yourself the question, why are you there? Are you there to serve your clients or are you there to push products? The right answer is almost always serve your clients, but perhaps in some cases it's not. Second was, and it's the huge lesson for me, was I just got very lucky and got put into this derivative area, or swaps as we called it, in 1987 when it was just getting started.

17:39And I rode that wave for the next 25 years. And it gave me an opportunity. In the outset, it's sort of the back room, in the dark room that nobody paid too much attention to, to innovate and create, and then later to industrialize, something that started from an innovative process. the most fabulous learning experience of my life. I was just, you know how things happen, just a confluence of things and events that allowed me to glom onto that at that point and just ride that wave. But we did some really interesting things at J.P. Morgan. And, you know, maybe we then sold the company to Chase. That cleanup was absolutely fascinating.

18:17You know, I can blame us for having done very bad due diligence at the time that we sold the company because we sold the company at a huge premium to a company whose stock was hugely overvalued. as it turned out. It's okay. As you see today with JPMorgan Chase, it worked out, but it was a very bumpy road. But that cleanup process was fascinating. And then Jamie came. And I learned as much from Jamie as I learned from anybody in my working life. He's just a highly disciplined, very focused manager. And we didn't always get along, for sure. And it didn't end well, my relationship with Jamie at JPMorgan.

18:52but it's carried on very well. I mean, I put him in the category of good friends to this day, despite the bumps we had along the road. He's a fabulous manager. How would you define your leadership style? I would define my leadership style as very collaborative. I'm not particularly directive. I mean, I can get deeply into the details if I need to, but I would prefer not to. I'd prefer that the people that are working for me are really taking care of the details themselves. I try to push accountability down. at every opportunity. I tried to create a team that is a team rather than a team that has a series of bilateral relationships with me.

19:31I probably, some would say that I over-index optionality, so that I carry too many options at too high a carry cost. Some would say that. Others would say the fact that you're prepared to back non-sure things is what has changed the organizations for the better that you work for over the years. I would accept that I probably over-index optionality. I'm biased, unbalanced. I think that's a good thing. But that's probably the most controversial of the things that are attributed to my leadership style. Some people say I just can't make a decision sometimes. And what would you say? I say I love optionality, and I'll make a decision when it's the right time to either exercise, sell, or shut down that option.

20:12Yeah. Optionality is often underpriced and worth a lot sometimes. Sometimes. Here, I think we'll put in a little jingle so that people can top up the coffee, and then we move on to geopolitics.

20:34How do you read today's world? It's obviously super tense today. And, you know, I wake up each morning wondering what happened overnight in China or Asia, or depending on where I'm sitting. And I go to bed each night wondering what's going to happen when I sleep. And, you know, what we find between dawn and dusk is things are going pretty well. So I happened to be in Vietnam on April 2nd. And I had met with the prime minister on the evening of the 1st. and then at the evening of the second actually and then woke up to find this, you know, that Vietnam was at 46 % on the tariff chart. We all remember the tariff chart.

21:14So this was the liberation day where they introduced... That was the day that tariffs were introduced. Yeah. And I'd said to the prime minister the night before, I don't know what's going to come today in this press conference, but I don't think you need to worry because at the end of the day, I don't think the president of the United States is really keen to trash his economy. And then the 46 % number came out and I met with him and the finance minister the next morning and he said, what kind of advice was that you gave me last night? Because we're worried here today. I said, I'm just, well, I'm a little bit more worried than I was yesterday because it was quite dramatic, this whole thing.

21:46But I still don't think you need to worry because I really don't think that the United States wants to destroy its own economy through inflation or through suppressed economic activity. So what I would suggest is that you identify those things that are really sensitive to the U.S. The obvious one for you in Vietnam is transshipments. You're a very large transshipment point, or at least allegedly, for Chinese goods that are basically stamped made in Vietnam on the way through. I don't think you make a lot of money at that. I don't think it's a big employer of your people. It's just a thing that you do.

22:20I think you could probably focus on that and cut a pretty good deal with the U.S. on the way back. Anyway, we had the view that tariffs would end up at 10 % for the world, 25 % for China. And I will still maintain that. I never changed that view. I would still maintain that's where we're going to be once we've tacked in all the exemptions and India has to cut the deal, etc. So if you but if you take the view that the US doesn't want to engage in self harm, and China doesn't want to engage in self harm, but they're in an intense competition that's going to persist for my entire lifetime, and beyond, I suspect, then you just have to ride with with that tension.

22:58And, you know, what I reflect on more broadly is that in the history of the world, we've never been at a time where there was less major conflict than right now. So of course, you don't feel that way if you're in Gaza or southern Lebanon or Ukraine. But broadly, this is a really peaceful time in the world. And I'm hopeful that we can sustain that. And I'm hopeful that it's fundamentally, it's a self-interest of the United States, China, even Russia, Europe, as the major military powers in the world, that that continue. When you talk about resetting globalization, what do you mean by that? We mean extracting the benefits of globalization without leaving key parts of the population behind as we did last time.

23:41So we all know that globalization was a tremendous enricher and generator of prosperity for billions of people around the world. We also know that there are extremely important chunks of the electorate in democracies that were left behind as their markets deindustrialized or partially deindustrialized. And hence we get the populist backlash. So resetting globalization, and that's just one example of people that were disenfranchised. I think there were also incidents of human rights or indigenous people abuses that came with globalization. There was a lack of focus on sustainability and managing greenhouse gas emissions that came with globalization.

24:21So resetting globalization is getting as much of the benefit that we have always recognized from globalization while taking maybe a slightly slower step from time to time to bring those other populations along. Are we moving towards a world with separate financial systems? I fear that we are, although I think there will be a big chunk of the world that operates in both. So for the time being, the dollar and the Bretton Woods system is still preeminent. China is steadily building up a financial infrastructure that is an alternative to the U.S. dollar. I don't think their objective is to displace the U.S.

25:01dollar, certainly not as a reserve currency, but I don't even think as a currency of trade. But they do want to have a facility to continue trading if their access to U.S. dollars is shut down. And so whether it's the, and we play very actively in both, call it financial systems. They're completely interoperable today. But of course, we could imagine a time when they're disintegrated as Russia was disintegrated from the global financial system after they invaded Ukraine. So I fear we're heading that direction bit by bit. I fear we're heading the same direction in technology and underlying technical infrastructure.

25:35But we've also seen that very important countries in the world, starting with India, Brazil, South Africa, the Middle East, aren't going to choose sides. And I don't think they can be compelled to choose sides. So they'll be operating in both financial systems. And as soon as you have somebody in the middle, then you've got the bridge between the two, which will render them interoperable, even if they're technically not interoperable. Let's spend a minute on the big regions where you operate. And let's start with China. How do you see the longer term outlook for China? Longer term, I'm very optimistic about China.

26:07I think they clearly have some huge technical and technology advantages. Now, they're coming from behind in some of the cutting-edge technologies, we know. But we've also seen how quickly they can catch up, even in things like chip design, where the gap was enormous even two years ago. So I think technically and technologically, China's in a good place. China's going through a major transition right now. And I've, at SAVU, lived through major transitions in economies as they develop. and they're quite ugly. They're usually associated with things like real estate crises or bubbles bursting, which is often associated with stock market crashes, recessions or depressions in some case.

26:48And these are extremely destabilizing things when they happen in the United States or the United Kingdom or Norway or anywhere else. China, I think, is desperately keen to avoid the adverse consequences of the deflation of, in their case, a property bubble, which was also a little bit of an equity market bubble, but really it was a property bubble. And so far, so good in the sense that they've not had a financial crisis following from the property crisis. I say so far, so good because it's not over. The property market hasn't yet begun to recover. The financial system is intact, but it's completely sapped consumer confidence and investor confidence.

27:21It's tough to reignite the consumer confidence in China. So as we sit here today at 4.8 or so percent growth, which is below potential for China, it's still just a middle-income country. 4.8 % is not the appropriate long-term growth rate for a country of that size. They've got a real challenge. And as the property market stabilizes, the equity market has begun to stabilize. I think they can expect, I think then they'll eject some of the stimulus that's lacking today, in particular into the consumer economy, and get a little bit of lift. But that could be another three or four years. In the meantime, the technical base looks quite good.

28:00And the other obvious challenge is that they've got an export-led economy, and they're so strong on the export side that they're being shut out of key markets, almost entirely shut out of the discretionary markets in the U.S. and now, I think, increasingly in Europe. How do you read India? India is a powerhouse. And I think the reforms that Prime Minister Modi initiated 10 years ago and is carrying on have been extremely effective. It's still a poor country. So there's a ton more to go. 8 % GDP growth figure in the most recent quarter is very encouraging, getting closer to what we would think is its real potential.

28:38There's still much more structural reform to do. There's much more infrastructure that needs to be built. And I think there's ongoing cultural adjustments that will be necessary to make it easier for foreign investors to operate in the country. But the wheels are in motion. I think India will carry on for some time. Middle East, major hope for you? The Middle East has been booming on the back of, obviously, oil prices helped, but that's less of a telling today. And a lot of English people moving there. Well, Dubai in particular is certainly picking up. Actually, the bulk of the wealth that's moving into Dubai is Indian or South Asian.

29:12It started during COVID because it turned out it was a really nice place to seek refuge. And they've been very welcoming to people with money in the UAE. But that's, yeah, chunks of the asset management industry are moving. And with that, a few tax exiles from Britain, I'm sorry to say. But, you know, I think the region is, I mean, the most interesting thing about the Middle East is that it's transforming from being an oil and creditor economy to being a developing, diversified economy. It's actually hugely capital consumptive. And it's interesting to see at the annual jamboree that they have in Riyadh that people used to go thinking they would walk away with money for their business.

29:55And now the people who go are people who are coming with money in their pocket to invest in the exciting projects there. It's a big change in just five years. Yeah. Talking about money, you've been an industry leader in digital assets. What role will this play in the future of banking? I think it will be absolutely central. And our view is, well, it's probably quite controversial a few years ago, less so today. But we have an underlying view, which is that eventually all things will settle on blockchains. And all things certainly mean securities, but also means money, so payments. And then eventually we'll mean real world assets like property and art and wine or whatever else people might want to invest in.

30:37And why do we think that? Because blockchain-based settlement is cheaper. It's easier. It's more transparent. It's more traceable, and it's real-time. So when you've got all those advantages, it's hard to see why that wouldn't ultimately prevail. The obstacles have been technical. There are no longer technical obstacles. We've piloted everything. The real obstacle is regulation. Regulators are understandably quite nervous about a whole new financial infrastructure. And why are they particularly nervous about this? So I think they're nervous for different reasons. Number one, the blockchain technology, the only place that's been deployed at scale is cryptocurrencies.

31:15And cryptocurrencies, which have nothing to do with real money, other than the fact that you can convert them from one to the other. But cryptocurrencies became a domain for the criminal. And it was wonderful for money laundering or for disposal of illicit gains or whatever. And so that already makes law enforcement and regulators nervous. But second, as you think about moving that blockchain technology, moving into payments, so using things that aren't cryptocurrencies but are digital assets, as per your question, as a medium of exchange for payments, and it's quite a natural medium of exchange for payments, it means that the deposits are no longer sitting in banks.

31:52The deposits are sitting in stablecoins, which today, the big stablecoins are invested in government bonds. And as a bank regulator, and Andrew Bailey, head of the Bank of England, but also chairman of the FSB, has been very clear, and not him, not just him, many of the bank regulators have been very clear, that a system that drains deposits out of the banking system, basically to fund government deficits, is an unstable system. Now, it doesn't mean it won't happen, or it doesn't mean that bad things can happen anyway. But I think the benefits of a payment system that's based on stable coins, which would include also tokenized bank deposits, i.e.

32:31keep the money in the banking system, or central bank digital currencies, which the central bank gets the money, but they've always said we'll keep it quite small so as not to drain too much by-way of deposits from the banking system. but the benefits of a stablecoin based payment platform are inexorable in our opinion and therefore we've been investing in that area for seven years and have the leading institutional great platforms for those mechanisms talking about changes ai how will that change your bank it's a i think it's going to be a huge game changer uh yeah we i think we've all been using is it already or is it just it is in some areas so in in areas like you know fraud detection anti-money laundering, compliance.

33:12So we've always been trolling big data for patterns or incidents. It has already drastically improved our ability to fight financial crime. P.S., we still only capture 3 % of the financial crime that we think is committed in the world. So it's like we've hardly broken the back of the criminal. But it's a huge improvement. I think pretty much anybody that builds large-scale systems is using AI for code generation, so programming. But that's productivity. I think the productivity investments will be meaningful and will allow companies to grow with improved profitability. The big changes will come with product development, with customer service when we're deploying agents in scale to improve the customer outcomes, and advice.

34:01And I think we're very early stage in those applications.

34:10Let's move on to corporate culture. You talked a bit about your leadership style, but how would you describe the corporate culture in the bank? I think our culture is highly collaborative, and I'd say that would be the big positive, and based on diverse inputs. So we're structurally diverse as a company, and by that I mean we operate in 55 markets physically, another 120 via fly in, fly out and contact. And we have people from all those countries. What are the parts of the culture which you are trying to change? So the negatives of the collaborative culture are the slowness of decision making and getting things done.

34:47So some of that will come from the risk aversion that I mentioned earlier. And there's some legacy hangovers from that. But I think the bigger issue is in a very diverse organization where people don't always connect. You don't have the eye contact that means that I know exactly what you're saying and what you're saying that you're not saying or something like that. It's a little bit too hard to get things done in our bank. So some of that is simplifying process, but a lot of that is culture. And how do you go about changing that? So we're tackling the relative complexity of our bank by streamlining our processes mechanically.

35:22And that's the hardware. The software is better feedback systems so that we can, the people who go beyond collaboration into actual execution and getting things done and helping their partners are recognized as such. And that flows through to prospects for promotion or pay or whatever else is good in one's life. But we've got to have an equal focus on hardware and software to really shift the culture of the place. How do you benchmark speed? That's a really good question. How do we benchmark speed? Because we also work on getting speed up. Speed is an obsession of mine. I think organizations which make fast decisions generally make better decisions.

36:03Yep. So one of the measures that we look at carefully is what our colleagues tell us about their sense of speed. We measure in terms of processes, we measure turnaround times, just how many minutes or hours or days does it take to get from where we start to point B. So when it comes to onboarding a new asset manager, we want to know that we can get that time down from 60 days to six and then down to six hours and eventually to six minutes. Probably never happened, but given the screening that needs to be done. But benchmarking speed generally in one sort of universal metric, you've given me a good challenge.

36:40You mentioned the risk aversion. Just how do you handle mistakes in that environment? I think I'm quite tolerant of errors of judgment, and I'm completely intolerant of errors of principle. So when we find an error of principle, it's an instant out. And when there's an error of judgment, there's, unless it's material or very frequently repeated, it's indulged. I insist on understanding what the root cause of the problem was, and understanding how, wherever the mistake came from, how you're going to deal with it to make sure it doesn't come again, or to take best steps for it not to come again.

37:16But yeah, I wouldn't say we embrace failure. That's cliche, but we have plenty of it. So for example, we set up a venture lab. The venture lab has been extremely successful. We've created the best digital banks in Hong Kong and Singapore. We've monetized ventures in India and in the UK. We've got a good return on invested capital in our venture lab. At the top of the funnel is 2 ,000 investments or 2 ,300 investments that we've looked at. at the bottom end of the funnel, we've got 40 that we've materially commercialized. And we've got five that we've completely commercialized. So that's, there's a lot of failure in that 1960.

37:53Not all failures, some of them we just decided to discontinue. But the, so perfectly happy to try and, and then not succeed. Sometimes it's failure. And that actually has helped to change the, I think the tone within the company that, you know, better to try and fail than to not have tried at all. Yeah. So Bill, you are, everybody in the bank would look at you, right? You are the role model. How do you use that role model to breathe and live the corporate culture that you want other people to replicate? You know, listen, this role model question is interesting because I, one, I'm not keen to be a role model.

38:32I'm not keen to be the role model, especially in a bank that's as diverse as ours. Because like, what am I? I'm an American guy who's lived in the UK for 32 years and spent a lot of time around the world. But what I would like the role model to be is the aggregation of the senior managers, who's the person from Hong Kong who's been in the bank for 25 years, the person from Europe who's been in the bank for two years, the person from India, the person from Africa, et cetera. And collectively, we're a role model. and we're really collectively a role model if we work together as a seamless team despite the fact that we come from very different backgrounds, both culturally, linguistically, and organizationally.

39:09But yeah, what I would like people to see for me is that it's okay to take risk. It's okay to, I mean, you've got to be curious. I'm super curious and I want the people that work with me to be extremely curious themselves and I want them to be extremely empathetic. Those to me are the two defining terms for leadership are curiosity and empathy. What is it that drives you now? Curiosity and empathy. I'm extremely curious. I love learning. That's also very cliche, but it just happens to be true. What are the kind of things you try to learn now? So I learn in lots of different realms. Of course, the environment that we're operating in is changing every day.

39:47And I'm learning a lot about geopolitics at the moment. I'm learning a lot about innovation. And I've always been curious whether innovation can be taught or it's a character trait. What do you think? I don't know. I think some people are innately curious, and I think other people can adopt, sorry, innately innovative. And I think other people can adopt innovative characteristics through training. Why are some people more curious than others? More curious? It probably starts in the womb, more or less. But I grew up in an extremely curious household, and we didn't have a lot of money to travel around.

40:25But when we scraped a little bit together, we tried to see the world because it was something new and something different. And now I'm getting paid to do the same thing. It's fantastic. Do you think ambition and curiosity go together? I do. I do. Ambition is a bit of a curse. Tell me. I think ambition leads to perpetual dissatisfaction unless you lose the ambition at some point. So I think it's a bit of a curse. Sometimes I wish I wasn't ambitious. Are you like perpetually dissatisfied? I always want to keep on going, yeah. How long do you keep going for? As long as you let me. When do you wake up in the morning?

41:06I usually wake up about 5.30. And what do you do then? I read. I read in bed for a bit. And so I kind of clear all my emails and the research and news that comes in overnight. Still in bed? Still in bed, yeah. You go on one of these kind of tables that sits over your bed? I have this iPhone thing, but that's pretty good for that. My wife also gets up about the same time. If I'm lucky, we get up together, have a cup of coffee before I head off to work. And then, of course, I travel a lot. So a lot of times I'm alone in that bed, in which case I can hang out a little bit longer. What do you read?

41:42So, well, for work, it's whatever comes in overnight, which is a lot of research and news and emails. in my free time and i do try to get a little bit of free time every day i typically read fiction and uh i uh typically fiction that's that's kind of hard to get through i want to be challenged i don't know why but i do give me an example of a hard uh all right so uh let's what am i so i mean right now it's actually not fiction well it's so i'm reading george saunders he's a fabulous american short story author but he's also written some novels is one pull of surprises things like about. And I actually attended a lecture of his in upstate New York about 15 years ago.

42:23He's fabulous. So he's written a book on the Russian short story, which he considers to be the perfect form. So it's six Russian short stories of Chekhov, Churganov and others. And then he analyzes them. And it's actually a university lecture and analyzes it page by page. So it's kind of fiction because the story is fiction. But the rest is a lecture. Why do I read that? Because it's just really interesting. Now you and your wife are very into theatre and your wife runs the Coronet Theatre in Notting Hill where they by the way sometimes put on Norwegian plays in Norwegian can you imagine and they are sell out.

42:56They are they are. Why is theatre so important for you guys? Well it is my wife's theatre I'm moral support and and I but I love it because it's obviously it's an alternative it's an alternative life for me actually and when I go into the Coronet Theatre in Notting Hill in London, I'm Anda's husband. And period, full staff. And if I'm wearing a business suit, they say, like, why are you the only guy here in a gray suit? And I say, well, don't worry about that. There's my wife. But, no, it's, I think it's extremely important for all of us to give back to our communities in our own ways. And that can come in lots of different forms.

43:32This is a theater that focuses on international work. It features prominently Norwegian work. I think we had, I think we were the first theater to put on Jan Fossey, the famous Norwegian playwright, after he won the Nobel Prize, which, if I'm not mistaken, you may have helped with. And it's very special to have that kind of a position in a local community. What's the play that everybody should see? Oh, there's so many plays that everybody should see.

44:03Well, everybody should see Hamlet. I think most people have seen Hamlet, But if you haven't, it's because it is just the classic story of the tragedy of life and death and power and empathy and curiosity and insecurity, etc., etc. But not very modern, although maybe you could say timeless. Maybe Ibsen is frequently referred to as the European Shakespeare or the Norwegian. Well, I think Ibsen is the number two playwright after Shakespeare. Yep. And for good reason. Yeah. And whether it's the, you know, Dals House would be a pretty good one, or I'd probably stop there. Yeah. So, Bill, in addition to seeing this place, what is your advice to young people?

44:52My advice to young people is stay on the path, but not for very long. And find a way. There was a famous American called Yogi Berra who said, when you get to a fork in the road, take it. which you have to think about a little bit to realize how ridiculous that is. But the gist of it is, when you do come to a turning point, from time to time, go the reckless route. And if you go the reckless route early, you can recover very easily. Don't go the reckless route right at the end of your working life. But in the beginning, and then you ask about young people, take a risk. And I can say, I only made two or three decisions my whole working life.

45:31One of them was to come to standard chartered. One of them was to go into that derivative business that I talked about earlier, which was 40 years earlier, 30 years earlier. And those are two of the best decisions I took because they were very, they were reckless, actually. It was reckless for me to give up my cozy life in asset management and go work for this struggling emerging markets trade bank. But it's worked out really well for me. And I did it because I thought it would be a great challenge and I quite enjoy risk. And the same thing back in my earlier days. Yeah. Well, I would say they have worked out very well indeed.

46:03And it's been really, really great talking to you. Big thanks. My great pleasure. All the best. Thank you.