Standard Chartered cuts 4,000 retail banking jobs

Standard Chartered chief executive Peter Sands moved aggressively on Thursday to reverse the Asia-focused bank's fortunes by closing the bulk of its global equities business and axing 4,000 jobs in retail banking.

The lender said it was dismantling its stockbroking, equity research and equity listing desks worldwide, becoming one of the first global banks to get out of the equity capital markets business completely. The decision to close the loss-making division will lead to 200 job cuts, almost all in Asia.

In its retail banking division, Standard Chartered said it has announced 2,000 job cuts in the last three months, and plans to axe a further 2,000 this year. The cuts would represent about 5 per cent of the bank’s 86,000 employees.

The bank also announced the departure of chief risk officer Richard Goulding and Jan Verplancke, chief information officer. It said both were retiring from the company and would stay until successors were appointed.

Mr Sands, who has been CEO for eight years, is coming under increasing pressure after a troubled two years, which abruptly halted a decade of record profits. Some investors said last year he should go, or the bank should at least lay out a clear succession plan.

Falling commodity prices and a slowdown in growth in many of its core emerging markets ate into Standard Chartered’s earnings in 2014 and the bank has been hit by a surge in bad loans and rising regulatory costs. It also took a $175 million hit from a suspected commodities fraud in China..

Closing the equities businesses, which had revenues of about $100 million a year but were losing money, should save the bank $100 million a year from 2016.

That will add to a plan announced in October to cut $400 million in costs this year as Mr Sands tries to reverse a slide in profits that has seen the bank’s share price slump more than 40 percent over the past two years.

Bankers in Standard Chartered’s equities division in Hong Kong arrived on Thursday to find they were locked out of the office. 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 Reuters, saying she had worked in research.

Standard Chartered’s London shares were up 2.7 per cent and its share rose 2.9 per cent in Hong Kong as analysts welcomed signs that Mr Sands is prepared to go further with his strategy overhaul.

London-based Standard Chartered issued three profit warnings last year and two months ago rating agency Standard & Poor’s hit it with its first ever downgrade, adding to pressure on Sands for a more far-reaching overhaul.

The bank's biggest shareholders include Singapore state investor Temasek and asset managers Aberdeen Asset Management and BlackRock.

The exits of Mr Goulding and Mr Verplancke come on top of several senior departures last year. Mr Goulding has been chief risk officer for eight years, based in London, and Mr Verplancke has been chief information officer and head of technology and operations for a decade, based in Singapore.

The bank also said its corporate development and strategy functions will now report directly to finance director Andy Halford, rather than Mr Sands. The bank said that had been the plan since Mr Halford joined last year.

Retail banking, where Standard Chartered has more than 10 million customers in 34 countries, is a major target in its cost-cutting drive and the bank plans to focus more on its 1.6 million wealthy retail customers and 400,000 business clients.

Other global banks such as HSBC and Citigroup have been making cuts to their retail banking businesses in recent years, exiting inefficient markets and trying to focus more on online services rather than bricks-and-mortar branches.

Standard Chartered launched its equities business in November 2008 when it acquired brokerage Cazenove from JPMorgan . Its retreat follows moves by rivals including UBS and Barclays to cut back in areas of investment banking where they are unprofitable or lack size.

The bank had been hiring staff in the division, which involves underwriting stock offerings for companies, as recently as October. The decision to get out of the business comes despite a boom in equity underwriting in Asia that saw fees for the industry rise 74 per cent in 2014.

Standard Chartered 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 23rd last year in equity underwriting in Asia Pacific, according to Thomson Reuters data.

Standard Chartered said it would retain its equity derivatives business as well as its convertible bond and macro economic research units.

Reuters