StanChart rules out share issue after plunge in profits

Wed Mar 4, 2015 9:26am EST
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By Steve Slater

LONDON (Reuters) - Standard Chartered (STAN.L: Quote) has no plans to tap shareholders for cash, it said on Wednesday, despite reporting a 25 percent drop in profits last year on the back of soaring bad loans.

The Asia-focused bank said it would not take "knee-jerk actions" and vowed instead to cut costs and shrink its loan book in an effort to quell concerns about its capital strength, the main task facing its new chief executive Bill Winters.

The bank is already braced for a fundamental overhaul when the former investment banker takes over as chief executive in June, with analysts and investors expecting him to launch a multi-billion pound rights issue to reboot capital after a prolonged slump in profits.

"It's the million-dollar question: has Bill Winters signed up for these targets?" said Mike Trippitt, analyst at brokerage Numis Securities.

"You can't sit there waiting for the cavalry to arrive and you've got to get on and run the business ... but he (Winters) is going to go through business unit by business unit and decide which ones to keep, what to grow and what to sell."

The bank's share price was up 3.7 percent at 1010 pence by 7.45 a.m. ET, still down by 25 percent since the start of last year.

However, the price has rallied by 9 percent since Winters' appointment was announced last week, part of an investor-led purge of top brass including veteran chief executive Peter Sands, three non-executive directors and the bank's head of Asia, Jaspal Bindra.

Chairman John Peace will also step down amid disquiet at management's failure to deal quickly with concerns about strategy and rising bad loans.   Continued...

A man walks past the head office of Standard Chartered bank in the City of London February 27, 2015. REUTERS/Eddie Keogh