StanChart to axe 80-100 branches under revival plan
By Steve Slater
LONDON (Reuters) - Asia-focused bank Standard Chartered (STAN.L: Quote) plans to cut up to 100 retail branches in 2015, or 8 percent of its network, to help save $400 million a year to improve profitability.
The bank is under pressure to improve performance after three profit warnings this year and a 30-percent plunge in its shares, and is holding three days of meetings with investors in Hong Kong to spell out its plans.
"We recognize our recent performance has been disappointing and are determined to get back on to a trajectory of sustainable, profitable growth, delivering returns above our cost of capital," Finance Director Andy Halford said in slides accompanying his presentation to investors.
Ten years of record earnings for Standard Chartered came to an abrupt halt in summer 2012 when it had to pay $667 million for violating U.S. sanctions on Iran. It has since been hit by a surging bad debts in key markets such as China and India.
Standard Chartered said in its slides that returns at its retail bank were being held back by high costs and that it aimed to cut 80-100 branches, out of 1,248 it had at the end of June.
Halford said the bank was aware of investor concerns, including whether its cost cutting plans went far enough and whether its capital was high enough. He also acknowledged their concerns over a rise in bad debts and non-performing loans and whether management was doing enough to tackle problems.
"We understand and are responding to the challenges we are facing. You will see further progress in 2015," he said.
The slides said the bank aimed to increase assets under management in its wealth management and private banking businesses by 10 percent or more next year, from $66 billion and $56 billion, respectively, at the end of June. Continued...