UK bank to axe 15,000 jobs, seeks US$5.1b

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Source: AFP | November 4, 2015, Wednesday | PRINT EDITION
ASIA-FOCUSED British bank Standard Chartered said yesterday that it would axe 15,000 jobs and raise US$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 US$3 billion, the bank said.

A Standard Chartered spokeswoman 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 US$139 million compared with a US$1.53 billion profit a year earlier, in a performance described as “disappointing” by group Chief Executive Bill Winters.

Revenue fell 18.4 percent to US$3.68 billion, and impairment losses rose from US$536 million to US$1.23 billion for the quarter.

Shares in the bank plunged as much as 6.2 percent on the Hong Kong stock exchange in the wake of the results and closed down nearly 3 percent — its stock value has fallen around 30 percent 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 said.

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 US$5.1 billion in capital through a rights issue, and a strategic review that raised its cost-cutting target to US$2.9 billion between 2015 and 2018.

It added that it was refocusing on “affluent retail clients” rather than corporate and institutional banking businesses and would exit or restructure US$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 JPMorgan, took the reins from Peter Sands in June after shareholder calls for a boardroom cull following profit warnings.

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