Standard Chartered shuts equities operation and culls 2,000 more jobs

The bank said it was 'on track' to deliver $400m (£265m) of cost savings for 2015

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The Independent Online

The Standard Chartered boss Peter Sands took the axe to businesses and staff again yesterday as he continued to grapple with the task of turning the emerging markets bank around.

The embattled chief executive, who has presided over three profit warnings in the past year, closed the door on the bank’s loss-making international equities business, doubled to 4,000 the number of staff being cut from branches, and announced the departures of two senior executives. The bank also said it was “on track” to deliver $400m (£265m) of cost savings for 2015.

But the City was unmoved, and on a day when the FTSE 100 performed strongly, the bank’s shares put on just 1 per cent, underperforming both the market and the other big banks.

Ian Gordon, an analyst at Investec said in response to the announcement: “There is, we believe, no silver bullet [to turn the bank round]. However, we are materially encouraged by further evidence of the breadth of initiatives now under way to take out costs and/or optimise capital/risk allocation and returns.”

Mr Sands managed to grow profits throughout the financial crisis, but the wheels have since fallen off at Standard Chartered, which has been hit by a series of departures and repeatedly disappointed with its performance.

The latest out of the door are the chief risk officer Richard Goulding and chief information officer Jan Verplancke, both of whom are in their early fifties. Neither has an immediate replacement and their departures were described as “retirements”.

The closure of the equities business – described as “overdue” by Mr Gordon – will cost 200 jobs, most in Hong Kong but some in London. It is a business where Standard Chartered has struggled to gain traction: it ranked a lowly 24th in equity fundraising tables last year, helping clients in Asia raise just $2bn.

The 2,000 jobs to be lost from its branch network follow on from the 2,000 that have already been taken out over recent months, although the bank will seek to carry out the cuts by not replacing those who leave rather than making redundancies. That will help keep the cost of the programme down.

Mr Sands said: “We are continuing to take significant action on costs by exiting or reconfiguring non-core and underperforming businesses, and by increasing the efficiency of our core businesses. We are well on track to deliver at least $400m of cost savings for 2015, and we are now focusing on achieving further cost savings for 2016 and beyond as we continue creating capacity to invest in the group’s core businesses.”

The day-to-day reporting of strategy and development is to shift from Mr Sands to the new finance director Andy Halford. However, a spokesman said this did not mean that Mr Sands, who will have led the bank for a decade if he is still in the post next year, had ceded overall charge of strategy. They said he had simply handed over immediate reporting lines.

Another analyst, James Chappell of Berenberg, said: “Management uncertainty is also likely to weigh as the market speculates on potential changes of chief executive.”