IFR Asia - October 27, 2018

People

&Markets

StanChart mulls job cuts again

Anglo-Asian lender struggling to keep a lid on costs

STANDARD CHARTERED is preparing for a

potential fresh round of job cuts during the

FOURTHûQUARTERûASûITSûCHIEFûlNANCIALûOFlCERû

conceded that the bank’s cost-cutting drive

had stalled.

“We have made virtually no progress

since May when we adjusted our budgets

in reducing our cost base,” StanChart

CFO Andy Halford said in an email to

senior managers at the bank that was

subsequently leaked.

Halford, who asked managers to outline

plans to lower expenses, including job cuts

and reduced investment spend, said that

the bank’s position was exacerbated by a

recent slowdown in income that would

likely continue into the fourth quarter.

“We have previously stated that our

second-half expenses will be similar to

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quarter results update,” a spokesperson for

StanChart said.

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time for the emerging markets lender,

which is due to report its Q3 results on

October 31.

Chief executive Bill Winters has spent

the best part of a year seeking to reassure

investors that the bank would be able to

keep a lid on costs even as it returned to

growth mode.

StanChart announced in May during

its Q1 results that its operating expenses

would likely be higher than the US$9.9bn

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In August, it reported a 6% rise in

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although this was again overshadowed by a

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Winters has consistently maintained

that the bank remains on course to meet

its medium-term target of an 8% return

on equity by the end of the year. Its ROE

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Several analysts queried whether this was

feasible.

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control – which is a key contributor to the

planned operating leverage designed to

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is actually investing enough to compete,”

said UBS analyst Jason Napier.

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is competes, which reduces its ability to

invest or use balance sheet growth to drive

the top line.”

JOB CUTS

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for StanChart, which has undergone a

massive reorganisation under Winters.

Shortly after taking up the reins in

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well as changes to lending practices and a

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a major reorganisation of the bank’s debt

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executives in bands 1-4. During the same

month, the bank announced plans to close

its equity derivatives and convertible bonds

businesses.

In 2016, StanChart also started

cutting around 10% of its corporate and

institutional banking headcount, only a few

months after Simon Cooper was installed as

CEO of the new division.

Recently, it has started trimming

coverage focus in certain sectors that are

more heavily dominated by US and some

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HEADûOFû

the general industries group in Asia, and

Dominic Richards, head of Asia media and

telecoms coverage, are among those to

have left.

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restructuring programme for good reason

but there comes a point where you have

to ask ‘how much more fat is there left to

trim?’,” said one former StanChart banker.

“When I was there, they had bankers

wearing multiple hats and it gets to

the point where if you cut back too

aggressively, you start to have an adverse

impact on the quality of your offering to

clients.”

Analysts are predicting a tougher Q3 for

StanChart overall.

“We expect StanChart’s third-quarter

results to show weaker revenues driven

by market volatility impacting wealth and

CORPORATEûlNANCEûINCOMEûINûPARTICULARvû

said UBS’s Napier.

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markets is a reasonable expectation too.”

THOMAS BLOTT

TOP STORY BANK STRATEGY

Who’s moving where...

„ CIMB GROUP has

appointed Mohd Nasir

Ahmad as its new

chairman, effective

October 20.

Mohd Nasir replaces

Nazir Razak, the

brother of ousted

Malaysian Prime

Minister Najib Razak,

who has stepped

down after almost 30

years with the bank,

the last four of which

were as chairman.

Mohd Nasir was

most recently

an independent

director at CIMB

and chairman of its

audit committee. He

has also served as

chairman of Media

Prima, Malaysia’s

largest media

company.

„ CITIGROUP’s head

of securities services

for Hong Kong Cindy

Chen has left the

bank.

Edward Tse, product

manager in the

bank’s custody and

clearing division,

has taken over her

responsibilities on an

interim basis.

Chen spent over 21

years with Citigroup

and is a notable

figure locally due to

her responsibilities

as head of business

development for

Stock Connect at

Citigroup.

Tse has been with

Citigroup for just

over six years and is

currently a director.