Standard Chartered axes 15,000 jobs after ‘disappointing’ Q3 loss
Asia-focused British bank Standard Chartered said Tuesday it would axe 15,000 jobs and raise $5.1 billion in capital after posting a “disappointing” third-quarter loss as it struggles to return to growth.business Updated: Nov 03, 2015 14:59 IST
Asia-focused British bank Standard Chartered said Tuesday it would axe 15,000 jobs and raise $5.1 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 $3 billion, the bank said.
A Standard Chartered spokesperson 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 $139 million compared with a $1.53 billion profit a year earlier, in a performance described as “disappointing” by group chief executive Bill Winters.
Revenue was down 18.4% to $3.68 billion and impairment losses increased from $536 million to $1.23 billion for the quarter.
Shares in the bank plunged as much as 6.2% on the Hong Kong stock exchange in the wake of the results and closed down nearly 3% -- its stock value has fallen around 30% 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”.
Standard Chartered announced a plan to raise $5.1 billion in capital through a rights issue, and a strategic review that raised its cost-cutting target to $2.9 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 $100 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 $400 million 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% 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% to $2.51 billion.