+Troubled bank reports first quarterly loss since 1998
+announces 15,000 job cuts in workforce of 90,000
Standard Chartered Bank responded to a near historic loss today by announcing it will embark on a fully underwritten $5.1bn rights issue at 465 pence a share, representing a 29.4 per cent discount to the bank’s theoretical share price following the price dilution.
The emerging markets-focused bank also said it would cut 15,000 jobs worldwide, out of a 90,000-strong workforce, as part of an increased push to reduce costs.
StanChart undershot analysts’ consensus expectations of a $913m pre-tax profit and instead reported a $139m loss for the three months to the end of September.
That compared with pre-tax profit of $1.5bn in the third quarter last year.
The group was the biggest faller on the FTSE 100 on Tuesday morning, trading down 5.3 per cent at 676p.
The bank’s Hong Kong-listed shares were 2.5 per cent lower at HK$83 a share in mid-afternoon trade today, having fallen more than 5 per cent to HK$79.9 soon after the announcement on Tuesday.
A 12 per cent year-on-year drop in revenues to $3.7bn was exacerbated by a doubling of impairment charges from the same period last year to $1.2bn, dragging the bank to its first quarterly loss since at least 1998.
The bank blamed the charges on “continued adverse trends in particular in India and commodities”.
StanChart’s UK-listed shares have halved in the past two years as investors feared it had lost its way just as the emerging markets its business is based on are slowing.
“The business environment in our markets remains challenging and our recent performance is disappointing,” said Mr Winters, who joined as chief executive in May after Peter Sands, the bank’s long-time leader, stepped down amid shareholder dissatisfaction.
Tuesday’s update included details of a long-awaited strategic review including plans to tackle $100bn of risk-weighted assets that would either be restructured or reduced in the next three years.
Mr Winters described the plans as “aggressive and decisive”.
The strategy will include a shift to focusing on developing its wealth management and private banking businesses while scaling back its corporate and institutional side.
