HONG KONG (Reuters) – Standard Chartered chief executive Peter Sands moved aggressively on Thursday to reverse the Asia-focused lender’s fortunes by closing the bulk of its global equities business and announcing 4,000 job losses in retail banking.
The bank said in a statement that it is dismantling its stock broking, equity research, and equity listing desks worldwide, leading to 200 job cuts as it exits an unprofitable business in which it had failed to build scale.
In its retail banking division, Standard Chartered said it has cut or announced the cutting of 2,000 jobs in the last 3 months, and plans to axe a further 2,000 over the course of this year.
The move forms part of a cost-cutting plan the bank announced last October that is targeting $400 million in savings this year, as it tries to bounce back after seeing its share price slump more than 40 per cent over the past two years.
Falling commodity prices and a slowdown in growth in many of its core emerging markets ate into Standard Chartered’s earnings during 2014, with the bank hit by a surge in bad loans and rising regulatory costs. It also took a $175 million hit from a suspected commodities fraud in China’s Qingdao port.
The bank said the retail job cuts should save $200 million in costs this year, while the closure of the equities business should result in $100 million of savings in 2016.
Standard Chartered shares in Hong Kong were up 2.6 per cent at 0806 GMT, reflecting expectations the cost-cutting move would help to boost profit.
Yet, some analysts said more action may be needed to get the bank back on track.
“It’s a logical step. But laying off staff is not enough to address the situation, said James Antos, a banking analyst at Mizuho Securities Asia in Hong Kong.
The cuts come less than two months after rating agency Standard & Poor’s hit the London-based bank with its first ever downgrade following three profit warnings in less than 12 months and rising losses from bad loans.
Standard Chartered said in October that operating profit for the July-September quarter fell 16 per cent to $1.5 billion in the same period a year ago.
Sands, who turned 53 on Thursday, had achieved a decade of record profits up until 2013 with big bets on growing the bank’s loan book in Asia and a push into commodities.
But after eight years at the helm, Sands is increasingly coming under pressure from shareholders to revamp the bank, with some investors urging the bank to plan his successor.
Its biggest shareholders include Singapore state investor Temasek and asset managers Aberdeen Asset Management and BlackRock.
Retail banking, where Standard Chartered has more than 10 million customers in 34 countries, is a major target in its cost-cutting plan with the lender planning to focus more on just its 1.6 million priority retail customers and 400,000 business clients.
Other global banks such as HSBC and Citigroup have been making cuts to their retail banking businesses in recent years, exiting inefficient markets and trying to focus more on online services rather than bricks-and-mortar branches.
Standard Chartered launched its equities business in November 2008 when it acquired brokerage Cazenove from JPMorgan .
The division includes cash equities, research and underwriting, all of which the bank said are unprofitable.
It failed to rank among the top ten banks globally for research or trading at the end of 2013, according to a survey by Greenwich Associates, and ranked just 23rd last year in equity underwriting in Asia Pacific according to Thomson Reuters data.