Standard Chartered reduces its Singapore office space by half

StanChart is giving up nine of the floors it leases at Marina Bay Financial Centre Tower 1 in the business district. ST PHOTO: KUA CHEE SIONG

SINGAPORE/LONDON (BLOOMBERG, REUTERS) - Standard Chartered Bank plans to cut half of its existing office space in Singapore's financial district, according to people familiar with the matter, in what is set to be the biggest floor reduction by a bank in the city-state in recent years.

The London-based bank is giving up nine of the floors it leases at Marina Bay Financial Centre (MBFC) Tower 1 in the business district, according to the people, who asked not to be identified as the information is not public.

Bloomberg previously reported that the bank was considering reducing its office space by at least four floors.

With the downsize, bankers may not have their own desks and could have to reserve their spots before coming to the office, the people said. The lender's current lease expires in October, one of them said. 

A StanChart spokesman said Singapore remains a “critical global hub” for the bank and represents one of its “most important” markets.

“We continue to retain a significant presence in MBFC and our two buildings in Changi Business Park, and constantly review and enhance our workplace environment to support new ways of working. 

"With 80 per cent of our Singapore-based employees adopting flexible work arrangements, we are reinvesting in and refreshing our premises to create a more open, conducive and collaborative environment.”

Banks worldwide are grappling with returning workers to offices in a bid to live with the Covid-19 pandemic, now in its third year. Just 3 per cent of white-collar workers want to go to the office five days a week, according to a recent poll, which warned that employees will quit if bosses force them back full time.

The downsizing of StanChart's Singapore workplace makes it the biggest reduction in office space among lenders in the city in recent years. Citigroup has already given up three of its office floors to, while Mizuho Financial Group has also cut some space.

Prime-grade office rents in Singapore's financial district rose for a third straight quarter in the first three months of this year, according to a Knight Frank report. Rents inched up 1.2 per cent from the previous quarter, the report said. More people are expected to return to offices after Singapore massively eased virus curbs late last month, allowing up to 75 per cent of employees who can work from home to go back.

Meanwhile, StanChart is leaving seven countries in Africa and the Middle East where it is sub-scale as it seeks to improve profits by narrowing its focus to faster-growing markets in the region, it said on Thursday (April 14).

The bank will fully exit Angola, Cameroon, Gambia, Jordan, Lebanon, Sierra Leone and Zimbabwe, likely by trying to sell its business in those markets.

It will also close its retail banking operations in Tanzania and Ivory Coast to focus solely on corporate banking.

The move marks a major shift for StanChart, which has been among the biggest European lenders to invest in the continent in recent years at a time when peers have been withdrawing.

The cuts would allow it to focus on bigger and faster growing economies in the region, such as Saudi Arabia where it has opened its first branch, and Egypt.

Prior to the announcement, StanChart operated in 15 African markets and 10 in the Middle East, employing around 15,000 staff, a major presence that had made it "unique among global banks" in the region, according to Citi analyst Yafei Tian.

But the complexity of operating at that scale left the bank with a comparatively high cost to income ratio of 74 per cent, which exiting sub-scale markets will help to improve, the analyst said.

The markets being cut generated just 1 per cent of total income in 2021 and a similar proportion of profit before tax, the bank said. StanChart is currently present in 59 markets overall and serves clients in a further 83.

It did not immediately comment on the number of job losses as a result of the cuts.

Its shares rose slightly on the announcement, up 0.6 per cent against a flat FTSE 100 index.

StanChart joins the ranks of other global players to reduce their presence in Africa in recent years as they struggle to reach scale compared with incumbent locals.

It has pursued a strategy of investing heavily in digital banking in Africa but found it hard to translate customer acquisition into steady profits.

Barclays sold its African unit in 2016, ending its 90-year presence on the continent, while Credit Suisse pulled out of its wealth management business in nine African countries this year.

The economy in Sub-Saharan Africa, home to many of the poorest nations on earth, has contracted sharply during the pandemic and has struggled to recover compared with developed economies.

The International Monetary Fund predicted in October that the region's economy would expand by 3.7 per cent to 3.8 per cent this year and last - the slowest recovery relative to other regions around the globe.

Some lenders are still scaling up in Africa, with Deutsche Bank saying last year that it will expand its private bank in the region.

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