SCB, Your CCB Bank ;)

[syed putra]

I have been dealing with SCB for 20 years. They give me the impression they are not honest bank.

SCB not interested in small accounts. More interested in multinational and corporate accounts. Best to use Malaysian banks based in Singapore for personal accounts.no queues.

 

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[h=1]New Standard Chartered CEO faces tough choices in fixing the bank [/h]


Incoming StanChart chief faces difficult choices in turning the business around before its major shareholder loses patience and decides to sell






When you don't know where you are going, all roads lead there. That is the strategic and management dilemma that incoming chief executive Bill Winters confronts as he sorts the problems that face Standard Chartered.
The challenge may require general management rather than banking and financial skills, given the troubles Standard Chartered has suffered on numerous business fronts. Changing regulator demands and shifting markets can leave outcomes largely out of the control of a bank chief these days. Earlier this year, its previous chief executive, Peter Sands, closed global equities business and cut 4,000 jobs in retail banking.
Winters must make sense and constitute a cohesive group of businesses in the wake of restructuring, divestment and lay-off decisions made by Sands. This includes being one of the first global banks to exit equity capital markets completely by dismantling its stockbroking, equity research and equity listing desks worldwide.
The bank also shed retail banking jobs to pivot towards high-net-worth private banking. In 2012, Standard Chartered spent HK$1 billion to set up a Greater China private banking hub in Hong Kong's Central district by taking over and redesigning the Forum in Exchange Square. Focusing on new, wealthy clients in southern China sounds logical, but it remains a very competitive business.
Shedding assets and divisions depresses overall earnings until the remaining businesses can turn around or start realising their potential. And that's assuming that management chose the right businesses and people to keep. It is not an impossible task as James Gorman, the chairman and chief executive of Morgan Stanley, was a former McKinsey partner who proved even a non-banker can transform a financial institution.
However, Standard Chartered appears to have lost sight of its core values in its rush for profits and reorganisation. The result is a disconnect between its vision and its distribution channels where customers have become marginalised. Becoming relevant to customers' businesses and lives and ultimately society is only possible if Winters begins listening to customers rather than spreadsheet models.
Temasek's agenda as the largest shareholder could diverge from the chief executive's
Once Winters quickly understands the cultural DNA that he has inherited at Standard Chartered, he will see if his experience and skill sets as a derivatives trader, hedge fund manager, regulator and former No 2 at JP Morgan are relevant for an organisation that remains at its heart a commercial and retail bank.
Investment bankers and hedge fund managers typically work in small teams expecting and generating instant action and short-term results. Commercial and retail bankers operate in larger groups and require leaders close to the frontlines of service, even knowing some customers.
This will be difficult to do when Standard Chartered's most profitable businesses are located outside London while it is headquartered in London.
Realising the importance of human interaction and relationships - both within the bank and with clients - is needed to bring a bank brand alive in Asia. No amount of mobile technology and slick marketing can substitute for the personal banking experience.
It is accomplished by retaining and training long-term staff. This may seem outdated, but today's objective of cross-selling private banking products and services demands even better relationship management skills.
Whether Winters has the time to do this will depend on the motivations of its controlling shareholder, Temasek Holdings, which holds an 18 per cent stake.
Temasek's agenda as the largest shareholder could diverge from the chief executive's. Winters has stated that the bank needs to raise capital. But does Temasek have the patience to endure more years of turnaround in challenging regulatory and market environments or will it sell its stake?
If a leading Singapore bank like DBS Group was willing and able to acquire Standard Chartered and relocate its headquarters to Singapore, this probably would have already been proposed by Temasek. But Standard Chartered (market capitalisation: US$27.15 billion) appears too big for DBS (market capitalisation: US$39.03 billion).
The obvious buyer of an international bank that is active in lending, trade finance, consumer banking and wealth management in Africa and the Middle East is a mainland Chinese bank.
Standard Chartered would represent a complementary extension of Chinese banks' long-term ambitions in those regions. Buying Standard Chartered would be a faster way to expand in these areas rather than building their own businesses.
Standard Chartered faces difficult choices that will decide its future.

 

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[h=1]Standard Chartered PLC insider Acquires £603,479 in Stock [/h]Standard Chartered PLC (LON:STAN) insider Andrew Nigel (Andy) Halford acquired 58,876 shares of Standard Chartered PLC stock in a transaction dated Wednesday, June 17th. The stock was purchased at an average cost of GBX 1,025 ($15.95) per share, with a total value of £603,479 ($939,120.76).
Shares of Standard Chartered PLC (LON:STAN) traded up 1.4591% on Thursday, hitting GBX 1043.0000. The stock had a trading volume of 3,065,175 shares. Standard Chartered PLC has a 52-week low of GBX 867.5000 and a 52-week high of GBX 1304.5000. The stock’s 50-day moving average is GBX 1051.03 and its 200-day moving average is GBX 1001.50. The company’s market cap is £25.74 billion.
STAN has been the subject of a number of recent research reports. Analysts at Citigroup Inc. reiterated a “buy” rating and set a GBX 1,300 ($20.23) price target on shares of Standard Chartered PLC in a research note on Wednesday. Analysts at Jefferies Group lowered their price target on shares of Standard Chartered PLC from GBX 722 ($11.24) to GBX 656 ($10.21) and set an “underperform” rating on the stock in a research note on Monday. Analysts at Deutsche Bank reiterated a “sell” rating and set a GBX 850 ($13.23) price target on shares of Standard Chartered PLC in a research note on Friday, June 12th. Finally, analysts at Sanford C. Bernstein reiterated an “outperform” rating and set a GBX 1,200 ($18.67) price target on shares of Standard Chartered PLC in a research note on Friday, June 5th. Nine research analysts have rated the stock with a sell rating, nine have issued a hold rating and seven have issued a buy rating to the company. Standard Chartered PLC currently has an average rating of “Hold” and an average price target of GBX 1,041.95 ($16.21).
Standard Chartered PLC is a United Kingdom-based bank, which is engaged in the business of retail and commercial banking. The bank provides a range of products and services for personal and business customers across 70 countries. Its services include Personal Banking, Business Banking, Private Banking, Islamic Banking and Online Banking.

 

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[h=1]Standard Chartered Client Chief Exits as CEO Winters Starts [/h]Standard Chartered Plc’s group head of corporate and institutional clients, Sean Wallace, is leaving, in one of the first senior executive departures since Bill Winters took over as chief executive officer.
Wallace will leave his Singapore-based role on June 30 after five years in the job, bank spokesman Piers Townsend said by e-mail. Two people, Mark Dowie and James Courtenay, are taking on extra responsibilities, Townsend said.
Wallace’s exit adds to the overhaul in Standard Chartered’s senior management team since Peter Sands announced in February that he would step down. Winters, a former JPMorgan Chase & Co. investment banker, is seeking to reverse two years of declining profit and rebuild investor confidence in Standard Chartered, whose stock has dropped 20 percent in London in the past 12 months, the worst performance among Britain’s banks.


“It’s a good indicator that real change is starting to happen at the board and senior management level at Standard Chartered, which is what everyone wants,” said Sandy Chen, an analyst at Cenkos Securities Plc in London with a buy recommendation on the shares. “More evidence comes from Naguib Kheraj being appointed senior independent director just a few days after Winters has taken the reins.”
Shares of the London-based lender jumped as much as 3.3 percent in Hong Kong. Standard Chartered was little changed at 1,030 pence at 9:22 a.m. in London. The shares have gained about 7 percent this year after dropping 29 percent in 2014.
[h=2]Bindra, Peace[/h]Dowie, vice chairman of clients and products in London, will be responsible for strategic direction for corporate and institutional clients, Townsend said. Courtenay, head of global corporates, will be in charge of day-to-day management of those clients, on an interim basis, while remaining in Singapore.
Along with Sands, Viswanathan Shankar, former Europe, Middle East, Africa and Americas CEO, and ex-Asia head Jaspal Bindra, also left this year. John Peace will step down as chairman next year. The bank named Kheraj as senior independent director on Wednesday. Kheraj, a former finance director at Barclays Plc, will lead the search for Peace’s replacement.
Winters, 53, pledged in a letter to employees on June 10, his first day on the job, to focus on capital and returns. He also said he would give details on his senior management team “following the summer” and his broader plans by the year-end.

 

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[h=1]StanChart CEO Winters to shift power to regional hubs such as Singapore [/h]Jun 25, 201510:12 AM[HONG KONG] Standard Chartered Plc Chief Executive Officer Bill Winters is planning to shift capital to regional hubs in an overhaul aimed at reviving the bank and meeting new regulatory demands, the Financial Times reported.
Mr Winters, who assumed his post on June 10, is expected to give more power to some subsidiaries in markets such as Hong Kong, Singapore, India, the United Arab Emirates and Africa, the FT said, citing people familiar with the situation.
In a letter to staff members on his first day on the job, the new chief pledged to review the UK-based lender's business and capital strength as he seeks to reverse two years of declining earnings. Analysts and investors are betting on a capital raising of 5 billion pounds (US$7.8 billion) to 10 billion pounds, the FT said.
"Bill set out a number of areas he is looking at, alongside the board, in his recent open letter to staff," Gabriel Kwan, a Hong Kong-based spokeswoman for Standard Chartered, wrote in an e-mail. "We will report back on these areas at the appropriate time."

Mr Winters, a former co-CEO of JPMorgan Chase & Co.'s investment bank, aims to announce his strategic plan for the company around the end of the year, according to the FT.
The bank's shares in Hong Kong gained 7.3 per cent through Wednesday since Mr Winters started his job, while its UK stock added 3.1 per cent. Standard Chartered dropped 1.1 per cent as of 9:43 am Thursday in Hong Kong.
BLOOMBERG

 

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[h=1]Egypt bank to unseat Standard Chartered
June 26 2015 at 08:00am[/h] By Bloomberg

Ahmed A Namatalla and Arif Sharif Cairo


AS the top loan arranger in Africa for the past three years, Standard Chartered is used to playing catch-up in the second half of the year. It has got its work cut out this year.
Egypt’s Banque Misr, a Cairo-based lender with about $650 billion (R7.9 trillion) fewer assets than Standard Chartered, is the best performer so far, underwriting about $1.6bn in loans on the continent, according to data. That is more than double the figure for second-placed Bank of China. Standard Chartered, joint last with seven other lenders, has not been this far behind since 2009.
“Typically we see African loan volumes stronger in the second half of each year, and we expect a similar trend will emerge in 2015,” Daniel Berman, the head of capital markets for Africa at Standard Chartered, said this week.
The lender has made a series of senior management changes this year in a bid to reverse two years of declining profit and rebuild investor confidence. Part of the slowing in African borrowing was because of the Nigerian election, Berman said.
The continent’s loans market almost doubled during Standard Chartered’s years of dominance to about $43bn in 2014.
State-owned Banque Misr has climbed the table as the economic policies of Egyptian President Abdel Fattah al-Sisi spur lending. The country is relying on government-sponsored infrastructure spending to pull the economy from its biggest slump in two decades.
More than 90 percent of Banque Misr’s loans this year have gone to the Suez Canal Authority and Upper Egypt Electricity Production Company, both of which are also state-owned companies. The nation is investing more than $8bn to dig a channel parallel to the Suez Canal to increase the number of passing ships and boost revenue.
Egypt’s economic output this year may jump to 4.2 percent, about double the average annual rate of growth since the uprising that ousted Hosni Mubarak in 2011. Countries in the six-member Gulf Co-operation Council have provided billions of dollars in grants, loans and investments to help support al-Sisi’s government.
Second-half rally
Economic growth in sub-Saharan Africa may slow to 4.2 percent this year from 4.6 percent in 2014, according to World Bank estimates released this month.
As African central banks raise interest rates to combat inflation, and economic growth shrinks, the second-half rally in lending activity may never come, according to London-based Capital Economics.
“We expect rapid credit growth in sub-Saharan Africa to cool off this year as central banks raise interest rates,” William Jackson, an London-based emerging markets economist at Capital Economics, said this week. – Bloomberg

 

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Ajay Kanwal to head Standard Chartered's ASEAN region including India

In a major reshuffle of its top deck, Standard Chartered Bank today appointed Ajay Kanwal as head of the ASEAN & South Asia region including India and will also appoint a new chief executive for India operations as its present CEO Sunil Kaushal, will lead the Africa and Middle East business.

The India CEO will be reporting to Kanwal who will be based out of Singapore. Both Kanwal and Kaushal’s new roles will be effective from 1sOctober.

The other two regions-Greater China & North Asia will be led by Ben Hung where as Tracy Clarke will head the Europe & Americas region. From here on, the head of all the four regions will be directly reporting to Bill Winters the Group Chief Executive of Standard Chartered.


The British lender has reorganised the current eight business regions into four in order to improve efficiency.

“The Group needs to kick-start performance, reduce its cost base and bureaucracy, improve accountability, and speed up decision making. The new structure will help achieve all of these critical objectives and will be in place as we communicate a comprehensive plan to address the Group’s performance by the year end,” said Winters.

Aparty from this the lender has also announced regrouping its client businesses under three heads -- Corporate and Institutional Banking, Retail Banking and Commercial and Private Banking.


In a statement the lender said that the new structure will play a key part in delivering the earlier announced target of $1.8 billion (approx Rs 11,350 crore) of cost savings by the end of 2017.

Winters took over the reins of the bank in June this year after Peter Sands quit in February after the dismal performance of the bank in the last couple of years. Along with Sands, Jaspal Bindra, who was the group executive director and CEO of Asia had also stepped down from the board.

In India, Standard Chartered Bank-largest foreign lender in the country in terms of branch network- reported better performance in FY15. It managed to grow its net profit by a whopping 93% in the last financial year to Rs Rs 3,051.4 crore. However, the pressure on asset quality hasn’t eased till now. In FY15 the gross non-performing asset (NPA) ratio increased to 8.90% from 7.82% at the end of March 2014.

This comes after the bank had witnessed a 46% decline in its India net profit in FY14 to Rs 1,584 crore from Rs 2,960 crore a year before on account of higher specific provisions made against advances.

“We recently reported strong domestic financial performance in India and the business is well poised to seize the opportunities presented by the coming economic turnaround supported by a business friendly Government,” said Kaushal.

In FY13, Standard Chartered had emerged as the most profitable foreign lender in the country but after the dismal performance in FY14, it lost the position to Citibank which continues to be the most profitable foreign lender in India.

 

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James Moore: Will the Winters storms at StanChart freeze Rees out?

An icy blast of Bill Winters is blowing through Standard Chartered, and no one is feeling chillier than deputy chief executive Mike Rees.

He’s not the biggest loser from the introduction of Winters’ “new management team”. He’s kept his job when plenty of colleagues are losing theirs.

But he has been neutered. All three of the business units which used to report to him will now be knocking on Winters’ door as part of what is being billed as a “simplification”.

These things always are so described when new chief executives come in, but Winters needed to act.

Ossification and management creep are endemic to big banks, particularly when they have been under the reign of the same chief executive for more than a decade as Standard Chartered had been under the now-departed Peter Sands. However, the changes announced today are much more about turning Standard Chartered into the bank of Bill.

A fair few Barclays shareholders will probably be thinking “if only” — given the speed at which Winters is acting.

But it’s hard to see the latter working effectively with a dominant chairman such as John McFarlane, who has temporarily taken on executive responsibilities at Barclays having made Antony Jenkins the first of as many as 30,000 seeking pastures new. Winters put the frighteners on Jamie Dimon at JPMorgan and was hustled out of the door for his troubles. After that experience, he was always going to demand what he has got: full control. Standard Chartered’s replacement for Sir John Peace as chairman will have the task of running the board and keeping out of Winters’ way when they join next year.

Will Rees still be there to join the welcoming party? That’s the last big question. Having taken more than $70 million (£45 million) in pay over the past few years he hardly needs the money. He does, however, know where the bodies are buried.

 

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[h=1]New York intensifies probe into Promontory work for Standard Chartered [/h]New York state's banking regulator has intensified an investigation into Promontory Financial Group, a global consulting firm, over its work for Standard Chartered Plc, according to a person familiar with the matter.
The probe, conducted by the New York State Department of Financial Services (NYDFS), focuses on a 2011 report to regulators about the British bank's transactions with Iran and other sanctioned countries, the person said.
At stake in the investigation is whether Promontory may have amended the report to regulators under pressure from the bank, the source said. "The concern is they sanitized the report," the person said, speaking on condition of anonymity because the investigation is not yet complete.
In an emailed statement, Washington, D.C.-based Promontory said it stood behind its work and the integrity of the professionals who conducted it.
In recent years, New York has scrutinized the independence of consultants retained by banks to report to regulators. A spokeswoman for the New York regulator declined to comment on the Promontory case.
Two other firms settled similar investigations. Deloitte LLP agreed in 2013 to pay New York $10 million and stay out of certain business for a year over accusations it watered down a report on Standard Chartered. Last year, PricewaterhouseCoopers paid $25 million and agreed to abstain from certain work for two years over claims it whitewashed a report involving Bank of Tokyo-Mitsubishi UFJ.
In 2012, the New York's Department of Financial Services threatened to revoke Standard Chartered's license to operate in New York over violations related to U.S. sanctions on Iran and other countries. The bank paid state and federal regulators $667 million that year, and another $300 million to the state last year, and it is still under scrutiny by authorities.
Bank of Tokyo-Mitsubishi reached settlements over similar violations.
New York subpoenaed Promontory back in 2013 and relations between the two became "acrimonious", the person familiar with the matter said, with Promontory not turning over documents sought by New York.
"We have sought for nearly two years to provide NYDFS with a complete understanding of the facts in this matter and, to that end, recently encouraged it to meet with our professionals," Promontory said in its emailed statement.
Starting Tuesday, New York plans to depose at least a half dozen employees of Promontory it has subpoenaed, the person familiar with the matter said.
Promontory managing director Michael Dawson, a former deputy assistant secretary at the U.S. Treasury, who helped lead the Standard Chartered engagement, is among those scheduled to be questioned, the person said.
Konrad Alt, Promontory's chief operating officer, will be asked about the firm's policies, though he is not suspected of wrongdoing, the person said.
The escalation of the probe was first reported late Monday by The New York Times.

 

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Raise funds now, investor tells Standard Chartered

Standard Chartered has come under fresh pressure to launch a multibillion-dollar rights issue after a leading shareholder said that the bank should raise new money if it had even the slightest concern about its finances.

The investor told The Times that the bank should announce a fundraising within months if it believes that it needs to bolster its balance sheet to get ahead of a slew of expected share sales from big British banks.
Bill Winters, the chief executive of the emerging markets lender, has yet to make a final decision on a rights issue after taking over two months ago, but the investor said that he had no time to lose.
“If Bill has any doubt at all in his mind about the bank’s capital, then he must do a rights issue. You only get the chance to do this once and there is no point hanging about. If it needs to be done, it should be done quickly,” the investor, who is among the ten largest shareholders in Standard Chartered, said.
The shareholder made clear that it would be content to support the cash-call and prevent a dilution of its stake.
At its full-year results in March, Standard Chartered set a target of reaching a core capital ratio of between 11 per cent and 12 per cent by the end of this year.
At the end of last year the bank had core equity tier one ratio of 10.5 per cent, down 0.4 of a percentage point year-on-year as a result of a change in the lender’s financial models, the cost of dividend payments and a $300 million fine from New York’s financial regulator for breaches of money-laundering safeguards.

This week analysts at Mizuho Securities, the Japanese broker, became the latest to explore the possibility of a rights issue by Standard Chartered and said that the bank could choose to raise as much as $10 billion. “We expect Standard Chartered to launch a rights issues later this year or early in 2016,” James Antos, of Mizuho Securities, said, adding that the fundraising would “regain investor confidence about the future direction of the bank”.
If the bank launched a $10 billion rights issue, it would force Temasek, the Singaporean wealth fund that is its largest shareholder, to write a cheque for more than $1.7 billion or risk seeing its stake shrink.
Dodge & Cox and Aberdeen Asset Management, its second and third-largest investors, would have to inject about $490 million each to maintain the size of their holdings.
This week Mr Winters announced a reshuffle of his senior management team, stripping Mike Rees, the deputy chief executive, of many of his reporting lines and switching them to himself. The bank is searching for a permanent chief risk officer and a head for its investment bank.
Announcing the changes, the bank said that its managers would develop a plan to address the future performance of the group as it seeks to make $1.8 billion of cost savings before the end of 2017. Mr Winters said that the changes would improve accountability, which he argued had been too diffuse in the past. “We are focused on the bottom line and there is plenty we can do on costs,” he said.
“We also have to rationalise our capital base and look at how we can differentiate our business from our competitors. I have been very clear with everyone that we should only be in businesses where we have a distinct offering.”

 

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Cut 4,000 staff this year: Standard Chartered

LONDON: Standard
Chartered has cut 4,000 staff since the start of the year as part of its
plan to streamline operations and cut costs, and said there could be further
cuts.

"We are clearly intent on getting greater efficiency in the
business, some of that will be headcount, some will be extra investment in
technology," Standard Chartered Finance Director Andy
Halford told reporters on a conference call.

He was speaking after
the bank halved its dividend and said it would raise capital from investors if needed after a 44 percent slump in
first-half profits.

 

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[h=1]Standard Chartered to cut dividend by 50% as profits fall [/h][h=2]The markets-focused bank Standard Chartered has suffered a 44 per cent fall in first-half profits and will see its dividend halved following an announcement from chief executive Bill Winters.[/h]According to Standard Chartered, higher charges for bad loans affected its profits, and the bank was also hit by slowing growth in emerging markets. Along Pre-tax profits falling to £1.17bn in the first half of the year, and revenues down by 8 per cent operating costs also fell 4 per cent.
Bill Winters, who replaced Peter Sands as chief executive in June, used his first results presentation in charge to detail some of his plans for the bank.
Mr Winters said he would simplify Standard Chartered with a “new management team and simpler organisational structure”.
The decision to slash the banks dividend will help the bank strengthen its capital base, and will act as a safety net protecting it from unexpected financial knocks.
Analysts believe the cut to the dividend will conserve capital and may need to raise $10bn of fresh equity.

Following the release of Standard Chartered’s interim results, Ian Forrest, investment research analyst at The Share Centre, explains what they mean for investors.
“Standard Chartered’s interim results were welcomed by the market today as the banking group revealed that its Tier 1 capital ratio had risen to 11.5 per cent from 10.7 per cent. Investors will see that that this indicates a higher level of security and stability within the company.”
“Within the results, we can see that the challenging nature of current trading was underlined by an 8 per cent fall in revenues, whilst pre-tax profits fell 44 per cent in the six months to June. Those currently invested will be displeased with the interim dividend being cut by 50 per cent to 14.4 cents. The bank has said that it expects the final dividend to be cut by a similar amount.
“There has long been speculation about whether a rights issue would be required to boost the level of capital, but the bank said today no decision has yet been taken by new chief executive Bill Winters as part of the ongoing strategic review.
“These results are a very mixed bag from Standard Chartered as they show a welcome rise in capital levels but rising bad loans and a big cut in the dividend. Major decisions, such as whether a rights issue will be required and where the bank will be domiciled in future, remain up in the air. These will hopefully be clarified as part of the strategic review due by the end of the year. For medium risk investors who believe in the longer-term attractions of growth in China, trust that the new CEO can make strides in turning the bank around and are not overly concerned about a dividend at present, the shares are still worth holding.”

 

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[h=1]Everything and the kitchen sink for CEO Winters' Standard Chartered [/h]Is Standard Chartered on the cusp of a major rights issue? That and more could be answered by freshly minted chief executive Bill Winters when he delivers his first quarterly earnings report for the bank today.
The former JP Morgan boss, who took over the bruised British lender in June, will have lots to cover. Disappointing results are likely on the list, with an average of analyst expectations showing a 15 per cent year-on-year plummet in pre-tax profits. A poll of analysts by Bloomberg said revenues could fall 7 per cent to US$8.8 billion.
A spotty performance will come as no surprise after several quarters of flagging growth and a stumbling attempt by predecessor Peter Sands to reform some of the bank's structural problems.
But Winters' stance on counteracting a hole in Standard Chartered's regulatory capital - something beckoning a rights issue of up to US$10 billion - will guide the bank's direction for years to come.
"Any comments on the future size, shape and returns of the business are likely to be more important than [the second-quarter] performance," Barclays analyst Sharnie Wong said in a note.
At the end of last year, Standard Chartered's common equity tier-one ratio, a measure on capital strength, was 10.7 per cent, leaving it at the weak end among global peers.
By contrast, HSBC Holdings had a ratio of 11.2 per cent last year and boosted it to 11.6 per cent in the first half of the year, mainly by cutting back on risk-weighted assets.
Some investors would like to see Winters do the same. A major rights issue could pull down the bank's earnings per share by upwards of 35 per cent.
Sands time and again pushed back on the need to raise capital and not until after an official announcement on his departure did Standard Chartered admit it needed to boost the common equity tier-one ratio. In March, it set a target of 11 to 12 per cent.
Winters will need a stronger balance sheet to combat rising non-performing loans and falling provisions. Analysts who spoke to the South China Morning Post said "kitchen sinking" - taking heavy provisions up front that would cover worst-case asset quality deterioration - would show Winters' resolve to take the bank in a new direction.
"I've got pushback on the idea of a mega rights issue from investors who feel the bank will be able to reduce risk assets and thereby build up the [common equity tier-one ratio]," said Jim Antos, an analyst at Mizuho Securities Asia. "I don't agree, in part because as a new [chief executive] Winters cannot afford to run the bank on a business-as-usual basis. Business as usual is what got [Standard Chartered] into its current predicament."
A worst-case-scenario provision charge could come to the tune of US$4.7 billion, which would pull down the bank's common equity tier-one ratio to 10.1 per cent, according to a calculation by Barclays. To chin the ratio above 11 per cent, a US$5 billion rights issue would be necessary, which Barclays said could grind down book value per share for the year by HK$13.50.
The mega issue of US$10 billion could pull down earnings per share by 36.5 per cent next year, by Antos' calculation.

 

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[h=1]Standard Charter faces calls to quit 'carbon bomb' mine [/h]Greenpeace has renewed its demand that the emerging markets bank Standard Chartered walks away from what has become known as Australia’s “carbon bomb” as a rival lender severed its ties with the controversial project.

Commonwealth Bank of Australia walked away from its role as financial adviser to the A$16bn (£7.45bn) Adani Carmichael coal mine, whose planned location on the doorstep of the Great Barrier Reef in the state of Queensland has created an international outcry.
It would be the country’s biggest coal mine, and one of the biggest in the world, but environmentalists have argued that the project would require massive seafloor dredging and port expansion, resulting in hundreds more coal ships navigating through the Reef.
Greenpeace also said it would produce 121 million tonnes of carbon dioxide emissions yearly at maximum production, driving climate change – already a grave threat to the future of the Unesco World Heritage site.
A spokesman for Standard Chartered, a major lender to the project’s Indian developer Adani, said: “At our AGM back in May, we said we’d suspend work on the project, engage with all of our stakeholders and consider our wider energy financing position. That remains the case.”
But Greenpeace complained that the London-listed bank remained “the leading financial adviser to the project”.
Greenpeace campaigner Sebastian Bock said: “Seeing Australia’s largest bank walk away from this highly controversial project should make Standard Chartered and their investors think twice about their involvement. Standard Chartered is now standing alone as the only known financial institution that has not cut links with this uneconomical and destructive mine.”
The mine’s future is already under a cloud after its approval was declared invalid by Australia’s Federal Court because of advice about the possible impact on two vulnerable animal species – the Yakka Skink and the Ornamental Snake.
Greenpeace’s renewed attack on Standard Chartered – it raised the issue at the annual meeting earlier this year – came as the bank issued its first-half results which saw new chief executive Bill Winters further stamping his authority on the struggling bank.
Mr Winters, who has already shaken up its management team, slashed the interim dividend by a larger-than-expected 50 per cent to just 14.4 US cents (9.2p) a share. He said the cut was “to better reflect our current earnings expectation and outlook and to set a payout ratio consistent with our desire to continue to strengthen our capital position”.
He also gave the clearest indication yet that the bank will stay in London – thanks to the Chancellor’s decision to phase out the banking levy and replace it with a profit surcharge – saying bosses were “very happy with the Budget”. He said it took one of the biggest issue over the London domicile “off the table”.
Standard Chartered reported a 44 per cent fall in pre-tax profit to $1.8bn, on revenues down 8 per cent to $8.5bn. Higher bad debt writedowns, currency fluctuations and regulation costs hit earnings.

 

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[h=1]Standard Chartered India loss pulls down global performance [/h]Bank reports $276 mn loss for six months to 30 June after setting aside $483 million for possible losses on loans


Mumbai: UK-based Standard Chartered Plc’s Indian business swung to a loss in the first half this year under the weight of higher provisions to cover mounting non-performing assets (NPAs), providing evidence that foreign lenders are not immune to the bad-loan malaise that has beset local banks.
The bank reported a loss of $276 million for the six months ended June, compared with a profit of $395 million in the year-ago period, after setting aside $483 million for possible losses on loans.
Provisions rose more than eight times from $56 million in year-earlier period and four times from $115 million Standard Chartered’s Indian unit set aside in the six months ended December. A spokesman for the bank said it would not comment on its India results.
Slower economic growth and projects stalled by delays in securing statutory approvals and completing land acquisition have crimped corporate cash flows and made it difficult for borrowers to repay debt in recent years, causing bad loans to pile up in the banking system.
“India has faced a slowdown in economic growth since 2012, relative to the higher rates of previous years. This combined with high indebtedness in some corporate sectors and lower appetite for refinancing, is reducing the success of corporate debt restructurings and distribution efforts,” the bank said in a statement on its website.
“The impact of macroeconomic reforms has been slower than the group’s earlier expectation. This is evidenced in corporate earnings data for the first quarter of 2015, which was the worst in the last 10 quarters, and credit growth that has been the lowest in the past two decades,” the statement added.
Figures released by the bank showed that gross non-performing assets (NPAs) in South Asia, of which India is a part, increased to $1.34 billion from $1.15 billion in the six months ended December.
Standard Chartered’s gross global NPAs increased by $1.25 billion, or 17%, since December 2014 to $8.74 billion.
“These increases were primarily driven by a small number of large exposures in Europe and Asean (Association of South-East Asian Nations). The increase in Europe non-performing loans primarily relates to loans to Indian clients and commodities related loans booked in the region,” the bank said.
The rising NPAs from India had a direct impact on the bank’s global results. First-half operating income fell 8% to $8.5 billion, missing the $8.8 billion average estimate of eight analysts surveyed by Bloomberg.
Total impairments jumped 70% to $1.7 billion driven by “adverse trends” in India, where losses on loans to corporate, institutional and commercial clients rose $369 million, Bloomberg reported.
Group chief executive officer (CEO) Bill Winters said the higher provisions and increased in NPAs “is a continuation of adverse trends and there are no signs of these reversing”.
“The sources of impairment (provisions) have been the same that the group identified previously: commodities, China and India,” said Winters, who took over as group CEO at the bank in June after former CEO Peter Sands failed to convince disgruntled investors he was the right person to reverse two years of falling profit amid slower economic growth in Asia.
In the statement, the bank said that total provisions for bad loans had increased 15% to $1.73 billion compared with December 2014, “reflecting recent deterioration in India and continued commodity market weakness as well as an isolated incident in our private banking clients business”.
“As a result of these factors, adjusted profit before tax for the year was $1.82 billion down 44%,” the bank said.
In India, where the bank has 100 branches, the largest network for any foreign bank, profit before tax was also hit by a year-on-year drop in interest income. The bank made a loss on its trading book.
Net interest income, or the difference between the interest a bank pays on its deposits and that it earns on loans, dropped 8% to $476 million in June 2015 from $520 million in June 2014.
Standard Chartered made a $120 million loss on trading in January-June 2015, compared with an $86 million profit it reported in the same period last year.
Fees and commissions the bank earned in the first six month of this year increased slightly to $111 million in 2015 from $108 million in 2014.
An analyst who used to cover the bank in India because it is listed in Mumbai as well said the bank is suffering the fate of its local peers in the country.
“When local public and private sector banks have seen their NPAs rise, how can foreign banks stay behind?” this analyst said on condition of anonymity because he is no longer covering the bank for his brokerage firm.
Standard Chartered shares were up 1.98% to £971.50 per share on Wednesday on the London Stock Exchange at 7.16pm India time, while the benchmark FTSE100 gained 0.78% to 6738.97 points.
The bank’s locally listed Indian depository receipts gained 0.75% to close at [FONT=&quot]Rs.[/FONT]94.30 per IDR on Wednesday on BSE, while the benchmark Sensex gained 0.54% to close at 28,223.08 points.

 

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[h=1]Standard Chartered to cut dividend by 50% as profits fall[/h][h=2]The markets-focused bank Standard Chartered has suffered a 44 per cent fall in first-half profits and will see its dividend halved following an announcement from chief executive Bill Winters.[/h]According to Standard Chartered, higher charges for bad loans affected its profits, and the bank was also hit by slowing growth in emerging markets. Along Pre-tax profits falling to £1.17bn in the first half of the year, and revenues down by 8 per cent operating costs also fell 4 per cent.
Bill Winters, who replaced Peter Sands as chief executive in June, used his first results presentation in charge to detail some of his plans for the bank.
Mr Winters said he would simplify Standard Chartered with a “new management team and simpler organisational structure”.
The decision to slash the banks dividend will help the bank strengthen its capital base, and will act as a safety net protecting it from unexpected financial knocks.
Analysts believe the cut to the dividend will conserve capital and may need to raise $10bn of fresh equity.

Following the release of Standard Chartered’s interim results, Ian Forrest, investment research analyst at The Share Centre, explains what they mean for investors.
“Standard Chartered’s interim results were welcomed by the market today as the banking group revealed that its Tier 1 capital ratio had risen to 11.5 per cent from 10.7 per cent. Investors will see that that this indicates a higher level of security and stability within the company.”
“Within the results, we can see that the challenging nature of current trading was underlined by an 8 per cent fall in revenues, whilst pre-tax profits fell 44 per cent in the six months to June. Those currently invested will be displeased with the interim dividend being cut by 50 per cent to 14.4 cents. The bank has said that it expects the final dividend to be cut by a similar amount.
“There has long been speculation about whether a rights issue would be required to boost the level of capital, but the bank said today no decision has yet been taken by new chief executive Bill Winters as part of the ongoing strategic review.
“These results are a very mixed bag from Standard Chartered as they show a welcome rise in capital levels but rising bad loans and a big cut in the dividend. Major decisions, such as whether a rights issue will be required and where the bank will be domiciled in future, remain up in the air. These will hopefully be clarified as part of the strategic review due by the end of the year. For medium risk investors who believe in the longer-term attractions of growth in China, trust that the new CEO can make strides in turning the bank around and are not overly concerned about a dividend at present, the shares are still worth holding.”

 

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[h=1]Under Scrutiny Standard Chartered Beefs Up Compliance [/h]LONDON—Standard Chartered PLC said Monday it has hired a slew of top compliance executives, a move that comes as the bank braces for increased scrutiny of its global sanctions controls from U.S. officials.


The London-based bank said it has poached Steve Munro as its new head of sanctions compliance from GE Capital, Duncan Wales will join as deputy general counsel from broker ICAP, and Carmel Speers will be its head of financial crime and compliance of the Middle East, North Africa and Pakistan.
The hires come as a Justice Department-appointed monitor, Navigant Consulting Inc., begins to check how Standard Chartered's global operations comply with U.S. sanctions rules, according to people familiar with the matter. Last year, Navigant flagged deficiencies in the bank's anti-money-laundering systems at its New York Branch, resulting in a $300 million fine for the bank.


In 2012, Standard Chartered settled allegations of sanctions violations with both the New York Department of Financial Services and the Justice Department. As part of the 2012 deferred prosecution agreement with the DFS, Standard Chartered had to hire a consultancy to check that its U.S. operations had adequate controls.
Late last year the Justice Department separately ordered the bank to hire a monitor for a new gig: checking that Standard Chartered is keeping tabs on the funds flowing through its global operations.
Navigant Consulting has now been hired to conduct both the DFS and Justice Department monitorships. The Navigant team, led by ex-prosecutor Ellen Zimiles, will, among other tasks, look at the bank's Middle Eastern operations, according to a person familiar with the probe.
Standard Chartered is working hard to beef up its crime fighting credentials. On Monday the bank said it has increased the head count in its Financial Crime and Compliance unit fivefold. The lender has already created a board committee to focus on financial crime and spent heavily poaching top compliance executives from rival firms.
The Justice Department's deferred prosecution agreement is set to run until 2017. Under the agreement, Standard Chartered avoids criminal charges as long as it doesn't break the law during that period.
In its annual report, Standard Chartered said it was cooperating with a Justice Department investigation related "to possible historical violations of U.S., sanctions laws and regulations." In its half-year earnings report the bank said it couldn't predict the timing or the outcome of the probe but said it recognizes that its compliance with sanctions and anti-money-laundering requirements, "not just in the U.S. but throughout its footprint are and will remain a focus of the relevant authorities."

 

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[h=1]Euro equity star Norris makes StanChart his biggest short bet[/h]Citywire AA-rated Barry Norris has made banking group Standard Chartered the biggest short bet in his FP Argonaut Absolute Return fund as a result of ongoing challenges for the company.
His comments come hot on the heels of fellow Citywire AA-rated Alain Dupuis saying he was increasing long exposure in the company despite the pressures.
While Dupuis was optimistic about the company overcoming short-term headwinds of senior management change and a profits drop, Norris believes there are more obstacles to overcome.
In an investor update, Norris said: ‘We really think that banking is a cyclical industry and economic growth in emerging markets is also cyclical, and we are at the beginning of a significant downturn in the credit cycle.
‘We think Standard Chartered has not made enough provisions for that downturn in the good times, and certainly we also think it either takes a significant multi-dollar provisioning charge or its earnings in the future are going to be weighed down by its failure to really fix the roof while the sun was shining.’
Norris added that Standard Chartered, which has had huge success in lending money into the fast-growing Asian and emerging market economies, will find it much more difficult to generate revenue here in the future.
‘We are also concerned that at the moment the significant problem areas for the company are not just India, China, and commodities,’ Norris said.
‘Once the Federal Reserve starts a hiking cycle, then we think that very highly leveraged economies in Hong Kong and Singapore will also provide Standard Chartered a big headache in terms of asset quality.’
When all these factors are combined, Norris said it was a struggle to find an aspect of the firm’s balance sheet which could prove itself immune to macro-led difficulties.
‘The company in a benign outcome is going to see its balance sheet shrink. It is going to see pre-provisioning profit falling – as really it cannot cut costs fast enough to cope with falling revenues – and provision charges are going to be much higher weighing on profits and the share count is going to be higher.’
The FP Argonaut Absolute Return fund has returned 14.5% over the 12 months to the end of June 2015. This compares with a return of 5.63% by the average manager in the Citywire Alternative Ucits – Long/Short Equity sector over the same period.

 

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[h=1]Yuan slide seen adding to StanChart's Asian challenges [/h]Already faced with a battle to revive the fortunes of banking group Standard Chartered (STAN.L), new Chief Executive Bill Winters is now confronted with another challenge in the shape of China's yuan devaluation.
Just over a week after Winters outlined his plans to revive the bank after a slump in profits, analysts say his turnaround efforts could be hampered by the yuan devaluation which threatens to increase bad debts in Asia and weaken other currencies in the region.
London-based Standard Chartered is the European bank most exposed to Asia's economic weakness and currency volatility, which come just as Winters launches his attempts to lift the bank's fortunes and improve profitability.
"We think that asset quality will continue to deteriorate and the worst is yet to come," said Barry Norris, chief investment officer at Argonaut, a fund that has a short position on the stock.
The bank, for many years a favourite among investors because of its exposure to fast-growing Asian economies, had already come under pressure from rising losses on loans to commodities clients and to customers in China, India and elsewhere.
Southeast Asia (ASEAN), where Standard Chartered generates 19 percent of revenue and has 26 percent of loans, could be particularly impacted by currency turmoil, analysts said.
Shares in Standard Chartered, which have more than halved in value since hitting a record 1,975 pence in late 2010, are down 3.4 percent since China's devaluation and HSBC is down 2.7 percent. By comparison European banks as a whole .SX7P are down 2.3 percent.
The relatively muted reaction is because a rise in bad debts had already been forecast at StanChart and there were concerns about China's slowdown, analysts said. The impact of weaker Asian currencies on revenue is also partly offset by a reduction in local expenses, such as wages, in dollar terms.
CREDIT QUALITY
But some say worse is to come.
"We believe ASEAN credit quality is set to deteriorate further, as existing trends are exacerbated by yuan devaluation," said Joseph Dickerson, analyst at brokerage Jefferies. He rates Standard Chartered "underperform" and has cut his price target on the stock to 602 pence from 656p.
Other analysts have also downgraded this week, with Nomura for instance cutting its target to 1055p from 1170p with a "neutral" rating.
China's yuan depreciation has sparked jitters its economy is slowing and it could start a "currency war", which dragged other Asian currencies to multi-year lows.
Standard Chartered reports in U.S. dollars so earnings are hit when local currencies weaken against the dollar. Weak local currencies reduced its income by $277 million in the first six months of this year, representing more than one-third of its 8 percent income drop.
Rival HSBC (HSBA.L) is also heavily exposed to Asia, but is more diversified in Europe and the United States. Its core Hong Kong market also appears less affected by the recent turmoil, analysts said.
Standard Chartered acknowledged moves in the yuan-dollar rate would have a direct impact as it reports in dollars. "The second-order impact on the Chinese economy and therefore our China-related business is obviously more of a macro (economic) conversation," said a spokeswoman in an email, declining further comment.
(Additional reporting by Sinead Cruise; Editing by David Holmes)

 

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[h=1]Standard Chartered’s Bad Loans to Soar in Asia, Jefferies Says[/h]Standard Chartered Plc’s losses on bad loans will climb faster than expected in the second half, hurt by falling commodity prices and a devaluation in the Chinese yuan, according to Jefferies International Ltd.
Loan impairments will increase to $3.3 billion both this year and in 2016, about a third higher than the analysts previously predicted, following a 70 percent jump in losses to $1.7 billion in the first half. Jefferies also cut its 2015 profit estimate by 15 percent to $2.6 billion as the bank’s revenue falls faster than it can sell assets.
“We expect credit quality to worsen in the second half,” Joseph Dickerson, who has an underperform rating on the stock, said in a report on Thursday. Southeast Asian loans “started to deteriorate markedly in the first half and we expect pressures on the commodity side to continue. The recent yuan devaluation will have negative consequences for Malaysia and Indonesia.”



Chief Executive Officer Bill Winters, 53, last week cut the bank’s dividend by half to save $1 billion and stave off the immediate need to raise money as he grapples with dwindling profit. Some analysts had forecast a capital gap of as much as $10 billion. Standard Chartered, which makes most of its earnings in Asia, has been cutting its exposure to commodities and has said it remains “watchful” as bad loans surge in India and China.
The stock rose 1.5 percent to 884.7 pence at 10:09 a.m. in London, paring the loss this year to 8.1 percent. Winters took over as CEO from Peter Sands in June, sparking a rally in the shares after they plummeted 29 percent in 2014.
[h=2]Generate Losses[/h]Malaysia and Indonesia are the next Asian markets that could generate losses for Standard Chartered because their largest trading partner is China, where demand is “decelerating,” Dickerson said. The Chinese central bank intervened to support the currency in mainland trading on Wednesday, causing panic selling that sparked the biggest rout since 1994. Southeast Asia is the bank’s largest market after China, accounting for 26 percent of the bank’s customer loans.
Revenue at Standard Chartered will fall to $16.8 billion in 2016 from an estimated $17.1 billion this year, Jefferies said. All four of the lender’s divisions reported a drop in revenue in the first half, led by a 19 percent slump in the commercial clients business, the bank reported Aug. 5.
“Loans are shrinking faster than we had expected as the company appears to have stepped up de-risking activity in a move to generate capital and improve returns,” Dickerson said. “The earnings power of Standard Chartered is well below what the consensus expects.”