Standard Chartered to Cut 15,000 Jobs, Raise $5.1 Billion
Nov 3, 2015 15:21:32 GMT 7
rgs2001uk likes this
Post by Fletchsmile on Nov 3, 2015 15:21:32 GMT 7
More bad news for StanChart. They did well during the financial crisis. Seems now that other banks are recovering and regaining their footings they're slipping back...
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Standard Chartered to Cut 15,000 Jobs, Raise $5.1 Billion
CEO Bill Winters says bank's performance is `disappointing'
-Capital raising comes after unexpected quarterly loss
-CEO Bill Winters says bank's performance is `disappointing'
Standard Chartered Plc said it will cut 15,000 jobs and raise 3.3 billion pounds ($5.1 billion) in a rights offer after posting a surprise loss as loan impairments in India soared. Shares of the lender plunged.
The bank pledged savings of $2.9 billion by 2018 and will restructure or exit $100 billion of assets, according to a statement on Tuesday. Standard Chartered’s shares fell as much as 6.2 percent in Hong Kong after the announcement of a $139 million pretax loss for the third quarter, extending this year’s decline to 31 percent.
Chief Executive Officer Bill Winters is seeking to reverse damage caused by predecessor Peter Sands’s expansion in emerging markets such as India, which has saddled it with delinquent debt. His fundraising plan comes ahead of the publication next month of British regulators’ bank stress tests. Standard Chartered, which generates most of its revenue in Asia, said it has also been hurt by China’s slowdown and slumping commodity prices.
"This is one of the most significant repositionings of a large financial group we have seen,” UBS Group AG analysts led by Stephen Andrews said in a note. A strategy of shifting towards higher-return retail and wealth management businesses will “take several years to achieve, there is no quick fix,” they said.
Investment Plans
The sweeping job cuts, part of creating a “simplified” structure, are on a gross basis, Standard Chartered said. The London-based lender has about 86,000 employees. Besides strengthening the balance sheet, the capital raising will help fund a planned $3 billion investment over three years into “strategic opportunities,” technology and upgrading regulatory and compliance systems, the lender said.
“The business environment in our markets remains challenging and our recent performance is disappointing,” Winters, 54, said in a statement. On a conference call, he said the bank could restore a reputation that had been “a bit tarnished over the past few years.”
Winters’ Pledge
On the first day in the job in June, Winters pledged to strengthen Standard Chartered’s “financial position and re-orient the bank for better returns on capital.” A month later, the former co-head of JPMorgan Chase & Co.’s investment bank appointed a new management team reporting directly to him to speed up cost cuts.
Winters’s job cuts follow competitors Deutsche Bank AG and Credit Suisse Group AG outlining in recent weeks plans to eliminate as many as 28,000 positions combined. Barclays Plc last week cut its profitability target for 2016 amid rising charges for misconduct and restructuring. In contrast, UBS on Tuesday reported a doubling of quarterly profit.
Standard Chartered’s third-quarter loss compared with a $1.53 billion profit a year earlier. The average of five analyst estimates compiled by Bloomberg was for a $903 million profit.
The two-for-seven rights issue offered at 465 pence per share will boost the lender’s common-equity Tier-1 capital ratio to 13.1 percent from 11.5 percent as of June 30, the bank said. Largest shareholder Temasek Holdings Pte said that it will take up what the bank said were rights for 15.8 percent of the firm’s existing share capital.
ROE Target
Standard Chartered said it targets a 10 percent return on equity and a common-equity Tier-1 capital ratio of 12 percent to 13 percent.
Impairment losses rose 129 percent from a year earlier to $1.23 billion, with the bank citing exposures to India and commodities. Raul Sinha, an analyst at JPMorgan Chase & Co. with an overweight rating on the stock, had forecast impairments at $831 million, adding to $1.7 billion of loan losses in the first half.
Standard Chartered and HSBC Holdings Plc will face a tougher round of stress tests this year as the Bank of England turns its focus on mounting risks abroad. The central bank will assess the resilience of seven U.K. lenders against a slump in the Chinese economy, a drop in oil prices and a prolonged period of deflation.
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Standard Chartered to Cut 15,000 Jobs, Raise $5.1 Billion
CEO Bill Winters says bank's performance is `disappointing'
-Capital raising comes after unexpected quarterly loss
-CEO Bill Winters says bank's performance is `disappointing'
Standard Chartered Plc said it will cut 15,000 jobs and raise 3.3 billion pounds ($5.1 billion) in a rights offer after posting a surprise loss as loan impairments in India soared. Shares of the lender plunged.
The bank pledged savings of $2.9 billion by 2018 and will restructure or exit $100 billion of assets, according to a statement on Tuesday. Standard Chartered’s shares fell as much as 6.2 percent in Hong Kong after the announcement of a $139 million pretax loss for the third quarter, extending this year’s decline to 31 percent.
Chief Executive Officer Bill Winters is seeking to reverse damage caused by predecessor Peter Sands’s expansion in emerging markets such as India, which has saddled it with delinquent debt. His fundraising plan comes ahead of the publication next month of British regulators’ bank stress tests. Standard Chartered, which generates most of its revenue in Asia, said it has also been hurt by China’s slowdown and slumping commodity prices.
"This is one of the most significant repositionings of a large financial group we have seen,” UBS Group AG analysts led by Stephen Andrews said in a note. A strategy of shifting towards higher-return retail and wealth management businesses will “take several years to achieve, there is no quick fix,” they said.
Investment Plans
The sweeping job cuts, part of creating a “simplified” structure, are on a gross basis, Standard Chartered said. The London-based lender has about 86,000 employees. Besides strengthening the balance sheet, the capital raising will help fund a planned $3 billion investment over three years into “strategic opportunities,” technology and upgrading regulatory and compliance systems, the lender said.
“The business environment in our markets remains challenging and our recent performance is disappointing,” Winters, 54, said in a statement. On a conference call, he said the bank could restore a reputation that had been “a bit tarnished over the past few years.”
Winters’ Pledge
On the first day in the job in June, Winters pledged to strengthen Standard Chartered’s “financial position and re-orient the bank for better returns on capital.” A month later, the former co-head of JPMorgan Chase & Co.’s investment bank appointed a new management team reporting directly to him to speed up cost cuts.
Winters’s job cuts follow competitors Deutsche Bank AG and Credit Suisse Group AG outlining in recent weeks plans to eliminate as many as 28,000 positions combined. Barclays Plc last week cut its profitability target for 2016 amid rising charges for misconduct and restructuring. In contrast, UBS on Tuesday reported a doubling of quarterly profit.
Standard Chartered’s third-quarter loss compared with a $1.53 billion profit a year earlier. The average of five analyst estimates compiled by Bloomberg was for a $903 million profit.
The two-for-seven rights issue offered at 465 pence per share will boost the lender’s common-equity Tier-1 capital ratio to 13.1 percent from 11.5 percent as of June 30, the bank said. Largest shareholder Temasek Holdings Pte said that it will take up what the bank said were rights for 15.8 percent of the firm’s existing share capital.
ROE Target
Standard Chartered said it targets a 10 percent return on equity and a common-equity Tier-1 capital ratio of 12 percent to 13 percent.
Impairment losses rose 129 percent from a year earlier to $1.23 billion, with the bank citing exposures to India and commodities. Raul Sinha, an analyst at JPMorgan Chase & Co. with an overweight rating on the stock, had forecast impairments at $831 million, adding to $1.7 billion of loan losses in the first half.
Standard Chartered and HSBC Holdings Plc will face a tougher round of stress tests this year as the Bank of England turns its focus on mounting risks abroad. The central bank will assess the resilience of seven U.K. lenders against a slump in the Chinese economy, a drop in oil prices and a prolonged period of deflation.
