Standard Chartered bank to cut workforce by 17 percent

Standard Chartered Plc said it will cut 15,000 jobs and raise £3.3 billion ($5.1 billion) in a rights issue as Chief Executive Officer Bill Winters struggles to revive a lender that halved in value over the past two years.

Recently-appointed group chief executive Bill Winters admitted that the bank’s third quarter performance was “disappointing”. It stated that it planned to reduce headcount, exit “15 underperforming and non-strategic businesses” and make a change to its leadership.

Mumbai: British major Standard Chartered said it is examining the legal aspect as to whether Indian Depository Receipt holders of the lender can participate in the Dollars 5.1 billion rights issue programme. The previous management had strongly insisted the bank’s capital position was comfortable and it would not need to tap shareholders for extra cash.

Mr Winters, a former boss of JP Morgan’s investment bank, said the “aggressive and decisive set of actions” were necessary to nurse the bank back to health after a torrid two years, scarred by regulatory punishments and hefty writedowns.

Many analysts said the plan does not go far enough, the FT reported.

Standard Chartered has been reorganizing its businesses over this year, trying to wind down its less profitable ventures.

However, the news comes after the bank recently reported its sagging Q3 2015 revenues that yielded an unexpected -$139 million loss.

It says the loss reflects de-risking initiatives and challenging conditions in key markets including depressed commodity prices and the slowdown in China.

The U.K.-based lender plans to raise US$5.1 billion in a rights issue to shore up its balance sheet and implement its updated strategy.

Standard Chartered shares fell almost 9 per cent in early morning trading, recovering slightly to close down 6.67 per cent, at 666p per share. UBS posted a bigger than expected year-on-year rise in third quarter net profit, but a few analysts expressed concerns over a lower than expected capital ratio and the fact that results had been flattered by a tax benefit.

It also announced that it will be reducing its exposure to India, which from one of the top most profit centres in the past has been slipping since the early part of the decade.

“The plan outlined seems sensible and it is clear where the bank now wishes to focus its business”.

Joseph Dickerson, analyst at Jefferies, questioned whether Standard Chartered was raising enough through the rights issue as he reiterated his “underperform” stance on the bank.