Standard Chartered will cut 17 percent of its workforce as soaring impairments added to Bill Winters’s woes, underlining the new chief executive officer’s challenge in turning around the bank as he tapped investors for $5.1 billion.
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“The business environment in our markets remains challenging and our recent performance is disappointing”, CEO Bill Winters conceded in a statement.
Winters was brought into the bank in June to replace Peter Sands, whose position as chief executive became untenable after a decade-long run of uninterrupted profit growth ground to a halt.
Nov 3 Standard Chartered’s second largest shareholder, Aberdeen Asset Management, said on Tuesday it backed the bank’s plan to raise fresh capital. It was also well down on the same period past year where we saw a $1.5bn profit. Operating expenses of $6.8 billion year to date were down four per cent. Regulatory costs of $690 million year to date were up 44 per cent year on year. The bank now employs around 86,000 people worldwide. It announced that it would cut 2,000 jobs around the world in January, while it had already cut 2,000 in the three months before January.
The capital raise and the asset restructuring will together push the bank towards a new common equity tier-1 capital (CET1) ratio goal of 12-13 per cent, the bank said.
The rights issue, StanChart’s first capital raising in five years, will be launched today at a price of 465 pence per share, a 35% discount to its last traded price in London.
“We have announced a strategy that makes big changes to how we will manage ourselves going forward”, Winters said in a statement.
Standard Chartered PLC with EPIC/TICKER LON:STAN has had its stock rating noted as “Reiterates” with the recommendation being set at “UNDERPERFORM” this morning by analysts at Jefferies global.
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Income from retail clients declined by 16% to US$1.3 billion and from private banking declined by 15% to US$131 million, due in part to weaker demand for wealth-management products in Hong Kong and Singapore, the bank said.
