What's going on?

Standard Chartered is an interesting London-based bank because it fared much better than most banks in the aftermath of the 2008 financial crisis. This was mainly due to its heavy exposure to emerging markets (EM) – but its fortunes reversed when EM economies began struggling. On Tuesday, though, the bank reported some positive results from its turnaround plan – and that sent the stock price up more than 10%!

What does this mean?

When things started really slowing in EM economies around 2012, Standard Chartered faced the prospect of many of its loans not getting repaid (�bad loans�). Bill Winters, its new CEO, was brought on board to right the ship – which he�s doing, essentially, by downsizing its operations and getting rid of many of its �bad loans� by selling them, at a discount, to other investors. On Tuesday, Standard Chartered said that its revenue is now much smaller but that it�s facing fewer �bad loans� than investors were expecting. And that surprise gave investors confidence that the turnaround plan might be working.

Why should I care?

For the stock: Standard Chartered performed well on a key metric. Banks own lots of different types of things (good loans, bad loans, government bonds, cash, etc.). A key metric, which shows how financially strong a bank is, is the ratio of the value of its safe holdings, like cash, to its overall holdings (it�s technically called the �common equity tier 1 capital ratio�). The theory is that the greater the proportion of safe holdings, the more stable a bank�s situation. Standard Chartered did better than expected on this metric � which helped boost the stock.

The bigger picture: This is a very different beast than the European banks. Yes, Standard Chartered is listed in London but its operations are mainly in Asia, the Middle East and Africa. European banks such as Credit Suisse, Barclays and Deutsche Bank have also been undergoing restructurings, but since Standard Chartered�s operations are so different, Tuesday�s news doesn�t say much about those turnaround endeavours.