Standard Chartered embarks on £480m group restructuring

Standard Chartered, the international banking group, is to embark on a £480m modernising and restructuring programme over the next three years with a net loss of 5,000 jobs worldwide - nearly a fifth of its global workforce.

Standard Chartered, the international banking group, is to embark on a £480m modernising and restructuring programme over the next three years with a net loss of 5,000 jobs worldwide - nearly a fifth of its global workforce.

The bank also announced it was close to the sale of Chartered Trust, its UK leasing operations, in a move which will seal the bank's departure from mainstream financial services in this country.

Most of the overall job losses will fall in back-office operations in Asia, Africa and the Indian sub-continent as the bank seeks to reduce the number of processing centres from fifty to two hubs serving its operations worldwide.

Rana Talwar, chief executive, said that losses in the UK, where the bank employs 2,000 people - mainly in Treasury and head-offices, will be "minimal".

The programme, he said, was the result of 18 months careful examination of the business since taking over from Malcolm Williamson in 1998. "We are taking a radical view ...This is a fundamental restructuring which is going to make us more cost-effective," he said.

Of the £480m, £200m will be taken as a one-off charge against the full-year results. The remaining £280m, covering modernisation in new systems, will be counted as investment spending in the normal way.

Mr Talwar said he anticipated the restructuring yielding savings of £70m next year rising to £170m a year in 2003. He added: "This will change us from a relatively old-fashioned bank ... to an efficient modern one with the management base on which to build our growth."

News of the restructuring completely overshadowed the bank's half-year results which showed profits rebounding 31 per cent to £356m thanks to an accelerating Asian recovery and lower bad-debt provisions.

Standard Chartered shares fell more than 10 per cent to 852p after the announcement. Analysts complained about the failure to prime the City about the scale of the charges and the lack of detail about where the restructuring will bite. Mr Talwar promised to provide a fuller breakdown of the restructuring in the autumn.

Analysts at Merrill Lynch had, the day before, put out a buy note on the assumption that HSBC's strong performance on the back of the Asian recovery would guarantee a sharp rise in profits for Standard Chartered as well. After yesterday's unpleasant surprise, many were once again contrasting HSBC, which isyielding the benefit of its investments, with Standard Chartered which, they said, risks falling back into old habits of disappointing, just when it has convinced investors it has changed.