Standard Chartered PLC chief executive Peter Sands moved aggressively yesterday to reverse the Asia-focused lender’s fortunes by closing the bulk of its global equities business and announcing 4,000 job losses in retail banking.
The bank said in a statement that it is dismantling its stock broking, equity research and equity listing desks worldwide, leading to 200 job cuts as it exits an unprofitable business in which it had failed to build scale.
In its retail banking division, Standard Chartered said it has cut or has announced the cutting of 2,000 jobs in the last three months and plans to axe a further 2,000 over the course of this year.
Photo: Reuters
The move forms part of a cost-cutting plan the bank announced in October last year that is targeting US$400 million in savings this year, as it tries to bounce back after seeing its share price slump more than 40 percent over the past two years.
The bank said the retail job cuts should save US$200 million in costs this year, while the closure of the equities business should result in US$100 million of savings next year.
Standard Chartered shares in Hong Kong were up 2.15 percent at about midday yesterday, reflecting expectations the cost-cutting move would help to boost profit.
Yet, some analysts said more action may be needed to get the bank back on track.
“It’s a logical step, but laying off staff is not enough to address the situation,” said James Antos, a banking analyst at Mizuho Securities Asia in Hong Kong.
The cuts come less than two months after rating agency Standard & Poor’s hit the London-based bank with its first-ever downgrade following three profit warnings in less than 12 months and rising losses from bad loans.
Sands, who turned 53 yesterday, had achieved a decade of record profits up until 2013, with big bets on growing the bank’s loan book in Asia and a push into commodities.
However, after eight years at the helm, Sands is increasingly coming under pressure from shareholders to revamp the bank, with some investors urging the bank to plan his successor.
Its biggest shareholders include Singapore state investor Temasek Holdings Pte, and asset managers Aberdeen Asset Management Ltd and BlackRock Inc.
Standard Chartered launched its equities business in November 2008 when it acquired brokerage Cazenove from JPMorgan Chase & Co.
The division includes cash equities, research and underwriting, all of which the bank said are unprofitable.
It failed to rank among the top 10 banks globally for research or trading at the end of 2013, according to a survey by Greenwich Associates, and ranked just 23rd last year in equity underwriting in Asia-Pacific, according to Thomson Reuters data.
Bankers in Standard Chartered’s equities division in Hong Kong arrived yesterday to find they were locked out of the office, while some in Singapore were escorted from their workplaces.
“We came in this morning and were told the equity business was being shut down,” a woman who identified herself as an ex-employee at the bank’s offices in Singapore told reporters, saying she had worked in research.
The decision to exit equities marks a reversal in strategy for the bank, which had been hiring staff in the division as recently as October last year.
Standard Chartered would be one of the first global banks to completely exit the equity capital markets business, which involves underwriting stock offerings for companies.
The move comes despite a boom in equity underwritings in Asia that saw fees for the industry rise 74 percent last year after a three-year decline.
However, Standard Chartered said it would retain its equity derivatives business, as well as its convertible bond and macroeconomic research units.
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