Suffering from two years of losses, Standard Chartered Bank (SCB) has decided to close its equity derivatives and convertible bonds business in an effort to cut costs and refocus its business on more profitable areas. Pre-tax profit between January and June this year was US$1.8 billion down 44% compared to the same period in 2014.   

 

According to a company statement, the bank was looking to serve clients and use capital “more efficiently.” This year has been all about restructuring for SCB.

 

In January, the UK-based lender announced that it was closing its stock broking and equity research services business. This summer also saw new bank management with the introduction of Ex-JP Morgan banker Bill Winters as CEO of SCB. Since Winters took over he has eliminated 1,000 senior positions and cut the dividend in half to save about US$1 billion for the bank. About a quarter of its 4,000 top managers would be notified by the end of November if they will be affected by ongoing cuts.

 

The recent closures have sparked several staff departures in the SCB’s Hong Kong office which include Ruby Lam, director of warrants and callable bull/bear contract sales and Simon Yeung, greater china head of equity structured products and warrant sales. The equity derivatives and convertible bonds business is generally run out of the Hong Kong office.   

 

A market comment on SCB from rating firm Fitch says that SCB “competes to a large extent on the basis of its far-reaching network which makes earnings generation more difficult if its competitors draw relative strength from their larger local presence. Its widespread presence renders the bank more susceptible to external shocks, including compliance, conduct, reputational and geopolitical risks.”

 

SCB will continue to offer equity-financing advice for corporate and institutional clients and will still offer securities trading for retail and private banking clients.