Standard Chartered: shock departure of finance director Richard Meddings

CEO Peter Sands faces questions over bank's position and unveils plans to merge wholesale and consumer divisions

Finance director Richard Meddings is leaving Standard Chartered as CEO Peter Sands unveiled plans to merge the wholesale and consumer divisions. Photograph: Bloomberg/Getty

Standard Chartered stunned the City on Thursday by announcing the departure of its long-serving finance director along with sweeping changes to the way it operates its business.

Chief executive Peter Sands unveiled plans to merge the wholesale and consumer divisions of the bank, which specialises in emerging markets. But he failed to quell analysts' concerns about its capital position and shares in the bank, which until last year had reported 10 years of profit rises, fell more than 4%.

Sands was forced to insist "I'm not going anywhere" after he promoted the current boss of the wholesale division - Mike Rees – to deputy chief executive.

The bank was also facing questions about its decision to pay its outgoing finance director, Richard Meddings, until next year even though it was his decision to quit after 11 years on the board. Meddings was caught up in the 2012 money laundering scandal that engulfed Standard Chartered, with a report from US regulators quoting his remark to an American colleague: "You fucking Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians."

Meddings said he had decided over Christmas to leave. He will receive his £800,000 salary until next year, and will be entitled to a bonus for six months of the year and is being allowed to walk away with unvested shares because he is regarded as a "good leaver". Those shares are worth around £8m at current prices but their actual value will only be known when they pay out in the coming three years and will depend on the performance of the group. Medding's pension pot is likely to reach £7m by the time his 12-month contract expires next year.

Also leaving is Singapore-based Steve Bertamini, head of the consumer division, which is being disbanded. Bertamini was only hired in 2008 and Standard Chartered has not yet finished paying the signing on fee he was handed to join. The last £900,000 instalment will be paid in May. Bertamini will have his relocation to the US paid by the bank and receive his £600,000 salary to this time next year. He also has shares worth £6m at current market values and assuming all the performance criteria are met by 2016.

Meddings, once regarded as a successor to Sands and often cited as being on headhunters' lists for top jobs, said he had not decided what to do after his departure in June, and quipped he might consider financial journalism.

Last year it emerged regulators had required Meddings to be stripped of responsibility for the risk functions at the bank.

Sandy Chen, analyst at Cenkos, said: "FD Meddings' departure is key – his position had already begun to erode at the end of last year, with risk oversight transferred from him to CEO Peter Sands.

"The question is why Meddings would leave Standard Chartered at arguably its most crucial time, when the wholesale and consumer banking units are being integrated and a complete group restructuring is kicking off."

Analysts at Credit Suisse were unconvinced by assertions by Sands – chief executive since November 2006 when he was promoted from finance director – that the bank had no plans for a rights issue to raise capital.

"We believe these announcements will create further uncertainty on the stock and that our main concern in terms of a weak capital position, has not yet been addressed," the Credit Suisse analysts said.

Standard Chartered had a record run of profits throughout the financial crisis but last year was hit by ongoing problems in its Korean division, forcing it to take a $1bn charge. The bank has since had to reduce its much promised growth target for double-digit income growth to high single-digit growth.