Standard Chartered to axe 1,000 senior manager jobs
Standard Chartered's new chief executive has told staff he plans to cut a quarter of its most senior management positions in a drastic drive to cut costs at the emerging market lender.
Bill Winters' plan to cut 1,000 of StanChart's 4,000 top managers underlines the scale of the overhaul being drawn up to turn round the bank's deteriorating performance.
The cuts at StanChart add to the widespread bloodletting in the European banking sector, where many large lenders are shedding thousands of jobs to improve sluggish performance, including Deutsche Bank, HSBC, Royal Bank of Scotland and Barclays.
Concerns about how hard StanChart will be hit by a slowdown in emerging markets and a slump in commodity prices — two of its core areas of business — have dragged down its shares recently.
But when Mr Winters' latest memo to staff was leaked on Friday it sent shares in the bank up 5 per cent, extending a rebound that started this week.
The memo told staff that a quarter of managers ranked in its seniority bands one to four would be informed that they are losing their jobs by the end of November. It also said the bank would sell assets and exit underperforming areas of business.
StanChart is preparing for the Bank of England to announce in early December the results of its stress tests on UK lenders to examine how they would fare in an emerging markets crisis.
Analysts at Goldman Sachs this week forecast that StanChart would be judged to have a $4bn capital shortfall in the stress test.
But Goldman estimated it could raise this money from asset sales and by exiting underperforming businesses, without needing to do a rights issue. It already cut its dividend in half in July.
StanChart said: "Bill's note to staff is an update on what we said we were going to do. In it he has made it clear that kick-starting performance is a priority and we are not standing still.
"We have a clear sense of our direction of travel and the key areas of focus — superior execution, targeted investments, divestment where we are not advantaged and innovation in our product and process design."
It added: "On headcount, we said previously (when we announced the management team and organisational changes in July) that there would be further personnel changes to come, as we simplify our organisational structure. We have already acted to reduce management layers and as a result will have up to 25 per cent fewer senior staff."
Mr Winters announced plans in July to shrink the bank's structure from eight to four regional units and appointed new chiefs to each of the expanded new divisions who will report directly to him.
The London-listed bank, which focuses on Asia, the Middle East and Africa, emerged relatively unscathed from the financial crisis.
But a long streak of double-digit profit growth was broken three years ago as its share price was dented by a series of profit warnings and scrapes with US regulators.
Several senior executives have left the bank recently, including Viswanathan Shankar, head of Europe, Middle East, Africa and the Americas; and Jaspal Bindra, head of Asia.
Bill Winters
StanChart is recruiting externally to fill a number of positions including head of the corporate and institutional bank, chief risk officer and head of compliance.
The bank, which employs almost 90,000 people mostly in Asia, is also searching for a successor to Sir John Peace, who is due to step down as chairman next year.
Mr Winters, a former JPMorgan executive, has warned investors that they should not expect a quick fix to the problems of the past couple of years. He aims to announce his strategic plan by the end of the year, most likely after it reports third-quarter results in early November.
W.rgds,
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