Standard Chartered Plc. is closing its institutional equities business and cutting about 4,000 jobs worldwide at its retail banking division in order to pare costs and restore profitability, the company said in a statement on Thursday. The bank said it is on track to cut costs by at least $400 million in 2015 after it cut 2,000 jobs over the last three months and plans to axe a further 2,000 jobs in 2015, the company added.
London-based Standard Chartered also said that closing the cash equities, equity capital markets and equity research operations will "impact approximately 200 roles across seven of the Group’s 70 markets," but help the bank save around $100 million in 2016.
The company further said that it has "made good progress" in closing 22 branches in the second half of 2014, and expects to achieve its previously announced target of 80-100 closures to save around $200 million in 2015.
“We are well on track to deliver at least $400m of cost saves for 2015, and we are now focussing on achieving further cost savings for 2016 and beyond as we continue creating capacity to invest in the Group’s core businesses,” CEO Peter Sands said in Thursday's statement.
Most of Standard Chartered’s global revenues come from its corporate and retail banking operations, which include services like savings, loans and handling other banking needs for businesses and households across emerging markets, especially in Asia, The Wall Street Journal reported. James Antos, a banking analyst at Mizuho Securities Asia Ltd., told the Journal that shutting down the stock businesses “makes sense” for the company, adding: “They should have done it a year ago.”
Most of the job cuts arising from the equities withdrawal are in Asia, Bloomberg reported, citing an unidentified company spokesperson. Of the Asian regions, Hong Kong accounts for the largest number of job cuts, while other affected countries include Singapore, India, South Korea and Indonesia, the spokesperson reportedly said.
“Investors should feel reassured that Standard Chartered is moving forward on its cost-cutting measures,” Edmond Law, a Hong Kong-based analyst at UOB-Kay Hian (Hong Kong) Ltd., said, according to Bloomberg, adding: “It’s the right direction to focus on its core business.”