IBS Journal December 2015
Standard Chartered slashing 15,000 jobs, plans to raise $5.1bn by 2018
Standard Chartered has said that it will be axing around 15,000 jobs and is aiming to raise more than $5.1 billion in capital following an unexpected Q3 loss in 2015. Shares in the bank have dropped 9% as
holders remain sceptical about the bank’s plans to restructure and save $2.9 billion by 2018. Standard Chartered is also planning to
raise around $5.1 billion in capital through a massive rights issue. Shareholders will gain two new shares for every seven they hold at a 30% discount to market price.
Disappointing The restructure has been announced amid a ‘disappointing’ Q3 pre-tax loss of $139 million. The bank posted a profit of $1.5 billion in the same period in 2014. Standard Chartered’s revenue fell 18.4% while losses on bad loans have nearly doubled to $1.23 billion. The bank is also increasing its target
core capital ratio to 13% and cut down on investments in what it calls ‘risky mar- kets’ where it could be over-exposed. This refocus includes a switch towards ‘affluent retail clients’ rather than corporate cus- tomers. It will, Standard Chartered believes,
result in the exiting or restructuring of around $100 billion in assets. The new strategy will also entail invest-
ing more than $3 billion in strengthening its technological, compliance and risk capa- bilities.
‘Aggressive and decisive’ On the jobs cut front the bank has been tight lipped over what sectors of the company will be worst hit. It is thought that the figure includes subsidiary businesses that Standard Chartered plans to jettison to gain capital. Bill Winters, who took over as CEO from
exiting Peter Sands in June, has labelled the restructure ‘an aggressive and decisive set of actions’. He has also revealed that the bank has been investigated twice by the UK regulator, Financial Conduct Authori- ty (FCA). The bank remains under scrutiny from US authorities over transactions involving
its Iranian clients. It will also face a stern test when the Bank of England publicises its stress test results in December, detailing which banks could struggle in the hypo- thetical event of a market crash in China. Standard Chartered will remain head-
quartered in the UK, Winters says, and is not looking to move abroad in the same way as rival HSBC has been threatening.
A thousand cuts Standard Chartered has been cutting jobs and slimming its business for some time in an effort to get back to a position of robust growth. In 2013 the bank saw multiple C-level staff leave, including CIO and head of technology, Jan Verplancke, and chief risk officer, Richard Goulding. It also appointed Anju Patwardhan as its new group chief innovation officer in
© IBS Intelligence 2015
July as a statement of its intent to embrace the digital side of banking. The bank said in January that it would slash 2,000 staff from its retail operations and announced the imminent closure of 100 branches to push customers online. Another 200 jobs are expected to go from the bank’s division for institutional cash equities, equity research and equity capital markets. Bosses at the bank gave up their
bonuses last year as profits fell by just over a third in 2014, slipping 37% to $2.51bn. The bank spoke exclusively to IBS Jour- nal about its banking technology set-up, confident that its in-house solution eBBS was more than capable of going blow-for- blow with specialised vendors (the article is available on the IBS Intelligence website). Alex Hamilton
www.ibsintelligence.com 23
Standard Chartered, Singapore © Erwin Soo, Wikipedia
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