LONDON • Standard Chartered will cut 17 per cent of its workforce as soaring impairments added to Mr Bill Winters' woes, underlining the new chief executive's challenge in turning around the bank as he tapped investors for US$5.1 billion (S$7.1 billion).
The bank's shares plunged.
The bank unveiled 15,000 job losses as it seeks to save US$2.9 billion by 2018, according to a statement yesterday. Stanchart will also restructure or exit US$100 billion of assets after it reported an unexpected third-quarter loss of US$139 million. That's down from a profit of US$1.5 billion a year earlier.
Mr Winters, 54, scrapped the bank's dividend for the second half, the first such move since at least 1988, to save about US$700 million.
He is seeking to reverse damage caused by predecessor Peter Sands' expansion in emerging markets such as China and India, which has saddled the lender with bad loans and eroded earnings over the past two years.
His fund-raising plan comes as British regulators prepare a second round of stress tests next month, with some analysts predicting a capital gap of as much as US$10 billion at Stanchart, Bloomberg reported.
"This is one of the most significant repositionings of a large financial group we have seen," UBS Group analysts led by Mr Stephen Andrews said in a note.
A strategy of shifting towards higher-return retail and wealth management businesses will "take several years to achieve, there is no quick fix", they said.
Stanchart shares fell 6.5 per cent to 667.4 pence (S$14.45) at 9.22am in London. They have dropped about 31 per cent this year, the worst performer among Britain's five largest lenders.
The sweeping job cuts, part of creating a "simplified" structure, are on a gross basis, Stanchart said.
Besides strengthening the balance sheet, the capital raising will help fund a planned US$3 billion investment over three years in "strategic opportunities", technology and upgrading of regulatory and compliance systems, the lender said.
"The business environment in our markets remains challenging and our recent performance is disappointing," Mr Winters said in a statement.
The London-based lender has about 86,000 employees. The bank said in January it would axe 2,000 jobs around the world this year in an attempt to make savings. It had already shed 2,000 jobs in the three months before January.
A spokesman in Singapore told The Straits Times that of the 15,000 gross headcount reduction by 2018, the bank has already substantially completed senior staff exits of 1,000 roles. "At this point of time, there are no further details on breakdown we can share," she said.
Stanchart's job cuts follow competitors Deutsche Bank and Credit Suisse Group outlining in recent weeks plans to eliminate as many as 28,000 positions combined, Reuters said.
Barclays last week cut its profitability target for next year amid rising charges for misconduct and restructuring. In contrast, UBS yesterday reported a doubling of quarterly profit.