StanChart to raise new capital, posts loss
HONG KONG – Standard Chartered Plc announced plans on Tuesday to raise $5.1 billion (3.3 billion pounds) in new capital via a rights issue, as well as new goals for cost cutting and core capital ratio as new Chief Executive Bill Winters set out his strategy for the lender.
The announcement came as Asia-focused Standard Chartered (StanChart) posted a third-quarter operating loss of $139 million due to growing regulatory costs and rising loan impairments in India.
The capital-raising plan came as part of a completed strategic review, that will also see the bank restructure businesses that together consume $100 billion in risk weighted assets, one-third of the group’s total.
Those include exiting low returning client relationships worth $50 billion and trimming $30 billion of risk weighted assets in some unnamed underperforming countries.
StanChart shares fell 4 percent in Hong Kong after the announcement, while the benchmark Hang Seng Index was up 1.3 percent.
The capital raise and restructuring will together push the bank towards a new common equity tier-1 capital (CET1) ratio goal of 12-13 percent, the bank said.
The bank’s current CET1 ratio – a core measure of financial strength – fell slightly in the third quarter to 11.4 percent, StanChart said in its results filing to the Hong Kong Stock Exchange.
The loss for the July-September quarter compares with a $1.5 billion profit in the same period a year ago.
StanChart formally reports earnings every half-year, but since 2013 began giving more details of quarterly progress in its ‘interim management statement’.
StanChart also said it will not pay any final dividend for the financial year ending 31 December, 2015. -Reuters