Standard to cut investment banking costs over 3 deckys

BY JOHN EISENHAMMER

Standard Chartered is paring its investment banking operations as part of an aggressive drive to cut costs across the group. Malcolm Williamson, the chief executive, said yesterday that reducing participation in investment banking was "a top priority".

He also said pre-tax profits in 1994 were up 27 per cent to £510m. Standard Chartered shares closed 17.5p up at 265p.

The investment banking operations recorded a loss of £16m after a profit of £47m in 1993. The bank's securities operation in Hong Kong, its most important centre, has been banned until next month from participating in new issues, after being involved in a market rigging scandal last summer.

Mr Williamson said it is too early to say whether Standard Chartered will be substantially scaling back its equity operations. The main thrust of the cost-cutting is to centralise back-office administration.

"We have to get our high investment-banking fixed costs well down, after the strong growth in the boom," said Peter Wood, the finance director.

A 3 per cent reduction in group costs last year helped boost strong earnings figures. Unlike the big UK clearers, whose improved performance has come almost entirely from reductions in bad-debt provisions, Standard Chartered posted 2 per cent growth in profits before bad debt, to £627m.

"These are very good figures; the cost reductions are particularly impressive," said Simon Samuels of Smith New Court, which placed the share on a buy recommendation.

Standard raised its dividend by a third to 8 pence. The bank benefited from strong economic growth and high saving rates in Asia. Mr Williamson stressed, however, that the bank was concentrating on the quality of lending, and reducing its property exposure. "We have to resist the temptation to push the boat out," he said.

By the end of March, the group will have reached its target of cutting the workforce by 10 per cent to 27,000. Standard Chartered said it had not been affected by the Barings collapse, but had reviewed its internal controls.