Standard Chartered halves its dividend and says it will raise capital externally if necessary, as its new Chief Executive Bill Winters outlines early plans to boost shareholder returns and rebuild capital after a 44 percent slump in profits. Sonia Legg looks at the challenges facing the Asia-focussed bank.
Years of record profits came to an abrupt end three years ago at Standard Chartered. And there's been little respite ever since at the Asia-focussed UK bank. Its first-half profit has slumped 44 percent to $1.8 ($1.82) billion. As a result it's halving its dividend to 14.4 cents a share to help boost core equity capital. It's a sharp contrast to many European banks which are starting to reap the benefits of putting their houses in order sooner. Bill Blain is from Mint Partners SOUNDBITE: Bill Blain, Market Strategist, Mint Partners, saying (English): "It's a good example of one of the second-tier players in the market - people looking at that and saying it has to de-lever, it has to raise new capital." New Chief Executive Bill Winters is on the case. And his thoughts on reviving the bank sent shares up more than 4 percent. He aims to double return on equity to a minimum of 10 percent. But there's no quick fix. The bank's been hit by fines from U.S. regulators for misconduct, strained relations with top share-holders and a weakened trading division. Not to mention the plunging price of commodities. SOUNDBITE: Bill Blaine, Market Strategist, Mint Partners, saying (English): "It's an area that is seen to be difficult for many of them and they are very, very concerned about how that sector develops going forward." Winters wouldn't rule out raising capital from investors either - in fact he said he'd do so if needed. And some analysts believe he could need as much as $5 billion.