Asia-focused British bank Standard Chartered said today it would axe 15,000 jobs and raise USD5.1 billion (HKD40 billion) in capital after posting a “disappointing” third-quarter loss as it struggles to return to growth.
The job losses are part of a major restructuring that will cost around USD3 billion (HKD23.3 billion), the bank said. A Standard Chartered spokeswoman said she could not give any further details of the job cuts.
More than half of the restructuring costs would come from potential losses on liquidating assets and businesses, the bank said in a statement. The remaining charges would be from “potential redundancy costs” of a planned headcount reduction of 15,000, as well as goodwill write-downs, it added.
The bank reported an unexpected pre-tax quarterly loss of USD139 million (HKD1 billion) compared with a USD1.53 billion (HKD11.8 billion) profit a year earlier, in a performance described as “disappointing” by group chief executive Bill Winters.
Revenue was down 18.4 percent to USD3.68 billion (HKD28.5 billion) and impairment losses increased from USD536 million (HKD1.4 billion) to USD1.23 billion (HKD9.5 billion) for the quarter.
Shares in the bank plunged as much as 6.2 percent on the Hong Kong stock exchange in the wake of the results – its stock value has fallen 32 percent in the past year.
“I know a lot of people losing their jobs is not good, [but] from a business point of view, that’s what they have to do,” Hong Kong-based financial analyst Jackson Wong told AFP.
Wong said loan losses were the main reason the bank swung to a pre-tax loss, adding that it needed to “control costs and try to remodel [its] business”.
– Rights issue –
Standard Chartered announced a plan to raise USD5.1 billion (HKD40 billion) in capital through a rights issue, and a strategic review that raised its cost-cutting target to USD2.9 billion (HKD22.4 billion) between 2015 and 2018.
It added it was refocusing on “affluent retail clients” rather than corporate and institutional banking businesses and would exit or restructure USD100 billion (HKD775 billion) of assets.
“The business environment in our markets remains challenging and our recent performance is disappointing,” Winters said in a statement filed to the Hong Kong bourse.
“The plans we have outlined today significantly reallocate resources to change fundamentally the mix of the group towards more profitable and less capital-intensive business,” Winters said in a separate statement detailing the strategic plan.
Winters, former co-head of JP Morgan, took the reins from Peter Sands in June after shareholder calls for a boardroom cull following profit warnings.
The bank said in January it would axe 2,000 jobs around the world in 2015 in an attempt to make savings of USD400 million (HKD3.1 billion) in a structural overhaul. It had already shed 2,000 jobs in the three months before January.
Standard Chartered saw its profits plunge in the first half of this year, with net profit slumping 36.7 percent in the six months to June compared to the period in 2014.
Bosses at the bank gave up their bonuses after profits fell by more than a third in 2014, sliding 37 percent to USD2.51 billion (HKD19.5 billion).
Words: AFP
Photo: Wikimedia Commons
