StanChart shares fall in HK after Fitch cuts rating

London-based Standard Chartered this week unveiled plans to tap investors for US$5.1 billion (S$7.2 billion), eliminate thousands of jobs and cut risky assets across Asia.
London-based Standard Chartered this week unveiled plans to tap investors for US$5.1 billion (S$7.2 billion), eliminate thousands of jobs and cut risky assets across Asia.PHOTO: AGENCE FRANCE-PRESSE

London bank's stock down by up to 7.1%; two S'pore-based execs said to be leaving

HONG KONG • Standard Chartered shares slumped in Hong Kong after Fitch Ratings downgraded the bank, citing the outlook for the lender's profits and asset quality.

The London-based bank this week unveiled plans to tap investors for US$5.1 billion (S$7.2 billion), eliminate thousands of jobs and cut risky assets across Asia.

The bank's shares fell as much as 7.1 per cent in Hong Kong yesterday.

Standard Chartered is now lagging behind the Bloomberg World Banks Index by the most since the gauge started in 2003.

While chief executive officer Bill Winters' measures to restructure the lender and boost capital address some of Fitch's concerns about the bank, implementing the plan could be challenging because of credit risks and high management and staff turnover, the ratings firm said in a statement.

Fitch on Thursday cut the lender's credit rating by one grade to A+ from AA- , with a negative outlook.

Mr Winters, who took over in June, on Tuesday unveiled 15,000 job losses to help save US$2.9 billion by 2018, with the bank scrapping the second-half dividend.

Standard Chartered will also restructure or exit US$100 billion of assets and reduce its riskiest lending in Asia after loan impairments surged. The bank reported an unexpected third-quarter loss of US$139 million, compared with a profit of US$1.5 billion a year earlier.

Its impaired-loan ratios remain above its peers' and appear to have become more volatile as a result of concentrated sector and country exposures, Fitch said.

"Standard Chartered remains vulnerable to volatility from a difficult operating and regulatory environment."

Standard Chartered's "ratings may be downgraded if the bank fails to strengthen earnings and reduce risks or if loan quality deterioration accelerated, undermining its capital strength", Fitch said. "Outsized fines or material business restrictions from litigation could also lead to a downgrade."

Meanwhile, Mr Simon Perkins, the Singapore-based global head of aviation finance, is leaving the bank, people with direct knowledge of the matter said.

This comes a day after reports that the bank's Singapore-based global head of foreign exchange research, Mr Callum Henderson, was leaving the bank.

Mr Henderson's name does not appear on the list of research team members on the bank's website, reports said, quoting sources. He was not available for comment.

Mr Perkins, who has been with the lender for more than a decade and has helped it expand in the booming aviation finance sector, also could not be reached for comment.

Standard Chartered declined to comment.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on November 07, 2015, with the headline 'StanChart shares fall in HK after Fitch cuts rating'. Print Edition | Subscribe