Date
24 November 2017
Jaspal Bindra, who has served 16 years at Standard Chartered, will leave his post as Asia chief executive in June. Photo: HKEJ
Jaspal Bindra, who has served 16 years at Standard Chartered, will leave his post as Asia chief executive in June. Photo: HKEJ

StanChart eyes US$1.8 billion cost cuts in three years

Standard Chartered (02888.HK) aims to cut costs by US$1.8 billion over the next three years through headcount reduction and asset disposals amid an increasingly difficult operating environment.

Job cuts and other measures to streamline its business will help the Asia-focused lender to save US$400-500 million a year, while US$300-600 million can be gained by exiting some of its businesses, according to the bank’s cost-saving plan.

Jaspal Bindra, the bank’s outgoing Asia chief executive, declined to give more details on the exact number of job cuts and whether it will sell its investments in Agricultural Bank of China and China Bohai Bank.

“The US$1.8 billion is backed by precise evaluation and hopefully we will get there. And the disposal of assets is very much part of that cost reduction exercise …. We are not having targets on the headcount,” he told reporters.

The bank also aims to lift its core tier-1 equity to 11-12 percent from the current 10.7 percent by 2018 and deliver return on equity of more than 10 percent in the medium term.

Bindra said these targets will be achieved through organic growth and no fundraising is needed.

For financial year ended December 2014, net profit fell 37 percent to US$2.5 billion while pre-tax profit was down 30 percent at US$4.2 billion.

Bindra said: “2014 was a challenging year and our performance was disappointing … We faced a perfect storm… We saw intense pressure on margins and volumes, a significant uptick in impairment and a sharp increase in regulatory related cost.”

Loan impairments rose 32 percent to US$2.1 billion, mostly from corporate and commercial clients. In Greater China, they were up 94 percent at US$469 million. 

Chief executive Peter Sands announced in January that the bank would scrap its global equities and research divisions and axe 2,000 jobs worldwide this year in a bid to save US$400 million in two years.

Sands, along with Bindra, will leave the bank in June after their turnaround efforts proved unsuccessful.

Sands will be replaced by JPMorgan veteran Bill Winters.

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JH/JP/CG

EJ Insight reporter

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