Is something afoot at Standard Chartered? Unconfirmed rumblings from inside the bank suggest a big cost cutting program might be shaping up for the final quarter of this year, although not everyone agrees upon its existence.
As we reported yesterday, Standard Chartered is busy building a team that specializes in 'operational excellence.' Led by Martyn Benson in Singapore, the team is tasked with working with COOs across retail, commercial, wealth, and corporate and institutional banking to help them create “simpler, faster and better” processes. So far so standard - every bank has something similar. However, insiders suggest Standard Chartered's standard efficiency drive might have fairly drastic consequences for its existing employees.
"There could be 15% to 20% job reductions in support functions in the fourth quarter," claims one senior insider. "The problem is that growth has stalled."
The Financial Times highlighted Standard Chartered's issues in a recent Lex Column. When Bill Winters arrived at Standard Chartered in June 2015, the FT pointed out that the bank's shares were around £10. Now they are closer to £6. "The ship is stable but going nowhere," said the columnist. "Mr Winters has not delivered," and, "StanChart’s return on equity came to just over 4 per cent, on an annualised basis. That is a long way away from the 8 per cent milestone for 2018 that the former JPMorgan banker set out almost three years ago."
All this is rumoured to have galvanized Winters into action (Standard Chartered employees will have Lex to thank if there are indeed big cuts in the fourth quarter). In the corporate and institutional bank, corporate financiers might want to watch their backs - revenues fell 4% in the first half compared to the previous year; in sales and trading, revenues were up 4%. Across the corporate and investment bank (CIB) as a whole, the return on equity for the first half of 2018 was 6.9%. This was up from 4.1% previously, but still below Winters' target of more than 8% across the bank. In truth, though, the CIB is the least of Winters' worries - the return on equity in the private bank was only 0.8%.
Not everyone at Standard Chartered agrees that something nasty is coming in the final quarter and Standard Chartered is declining to comment. All may yet become clear when the bank announces its third quarter results - or in the months to follow. Either way, if you work at the bank you might want to keep your head down - particularly as there are also rumours that redundancy packages in the UK are being cut to the bare minimum (as at Deutsche Bank) in an attempt to reduce costs.
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