Standard Chartered has announced plans to raise $5.1 billion in new capital through a rights issue and cut 15,000 jobs by 2018. As David Pollard reports the new Chief Executive Bill Winters is trying to restore profitability at the lender that has been hit hard by a slowdown in emerging markets.
Standard Chartered was already rumoured to be on the verge of slashing jobs nearly a month ago. So this announcement is no huge surprise - though the scale of the cuts might be. 15,000 jobs are to be axed - seventeen per cent of the workforce. And there was a bigger surprise for investors. An announcement of a 5.1 billion dollar rights issue knocking a tenth off the value of its share price at one point. They've already slid nearly a third this year - hit by a slowdown in key markets. Panmure Gordon's Simon French. (SOUNDBITE) (English) SIMON FRENCH, CHIEF ECONOMIST, PANMURE GORDON, SAYING: "The loan books ... were predicated on very strong, sometimes double-digit growth that is now being called into question as the Chinese economy slows and the rest of the region struggles with currency devaluation and the potential impact on dollar-denominated lending as the Fed moves closer towards the start of its tightening cycle." Those woes were confirmed by a fifth quarter of falling revenues. In what new chief exec Bill Winters is calling an "aggressive" set of actions, the bank wants three billion dollars of cost cuts by 2018. And wants to sell or restructure around one hundred billion dollars of loans - a third of its total. (SOUNDBITE) (English) SIMON FRENCH, CHIEF ECONOMIST, PANMURE GORDON, SAYING: "Balance sheet strength is front and centre in investors' minds, and therefore Standard Chartered, by strengthening their capital position, are calculating that this will put them in a stronger position going forward." It's not alone in its suffering. 15,000 jobs are to go at Deutsche Bank. And though UBS bucked the trend today with better-than-expected quarterly profits, even Switzerland's biggest bank is watering down its financial targets in the face of a tougher macro climate.