banking-finance News


Standard Chartered to Cut 15000 jobs

... nytimes:

Standard Chartered, an Asia-focused bank based in London, said on Tuesday that it planned to raise up to $5.1 billion in new capital, cut 15,000 jobs and accelerate plans to reduce its costs as its new chief executive, William T. Winters, reshaped the company.

The strategy update came as Standard Chartered reported a pretax loss of $139 million in the third quarter, driven by its exiting of some businesses, depressed commodity prices and challenging conditions in several crucial markets, including China.

On Tuesday, Mr. Winters, the former head of JPMorgan Chase’s investment bank, said the bank would take $3 billion in restructuring charges by the end of next year as part of its overhaul. He said it would also look to shave its annual costs by $2.9 billion by 2018. The bank originally aimed for cost cuts of $1.8 billion.

Mr. Winters was hired in June to turn around Standard Chartered, which has struggled in a weaker economic environment in emerging markets and tough trading conditions in recent quarters in some business lines, including currency hedging products. He replaced Peter Sands, the bank’s longtime chief executive, as part of a broad management shake-up.

“The business environment in our markets remains challenging, and our recent performance is disappointing,” Mr. Winters said in a news release.

“We are positioning the group for improved return on equity on a strengthened capital base,” he added. “We will execute as quickly as possible to get through this transition phase, start delivering improved performance and ensure our people are focused on providing value to our clients across Asia, Africa and the Middle East.”

Since joining the bank, Mr. Winters has outlined measures to streamline the company’s business and realign its management.

This month, the bank said that it planned to reduce senior staff positions by 25 percent and exit its businesses in equity derivatives and convertible bonds.

As part of the overhaul, Mr. Winters had said that the bank would have three main divisions — corporate and investment banking, commercial and private banking and retail banking — and that the management team would report directly to him.

On Tuesday, Standard Chartered said that its corporate and institutional banking unit would look to reduce the number of its products that were “capital intensive” and would seek to reduce its so-called risk-weighted assets by $50 billion.

The bank also said it would concentrate its retail banking network on large cities that deliver a return on equity of more than 10 percent, and it would seek to attract more affluent clients and invest in technology improvements. That would mean leaving countries in which it has a smaller retail presence.

As part of the overhaul, Standard Chartered said it would seek to eliminate 15,000 jobs by 2018.

Standard Chartered said it planned to raise 3.3 billion pounds, or $5.1 billion, in new capital to strengthen its balance sheet and support its restructuring efforts.

The bank is aiming for a so-called common equity Tier 1 ratio — a measure of financial strength — of 12 percent to 13 percent. The ratio was at 11.4 percent at the end of the third quarter.

Standard Chartered said Temasek, its largest shareholder, supported the capital raising, which would be underwritten by JPMorgan Chase and Bank of America Merrill Lynch.

The bank is one of several European lenders looking to strengthen capital under a new top executive.

Credit Suisse said in October that it planned to raise up to $6.1 billion in new capital and slash its costs as part of an overhaul under its new chief executive, Tidjane Thiam.

On Tuesday, Standard Chartered reported a pretax loss of $139 million for the three months that ended Sept. 30, compared with a pretax profit of $1.53 billion in the third quarter of 2014.

Standard Chartered’s operating income, which is similar to revenue in the United States, declined 18 percent to $3.68 billion in the third quarter, from $4.51 billion in the period a year earlier. Operating expenses were down 3 percent to $2.24 billion in the period, from $2.31 billion in the third quarter of 2014.

Impairments for loans and other credit risks continued to drag down its results, more than doubling to $1.23 billion in the third quarter, from $536 million in the same period a year earlier.