Standard Chartered is in trouble. The Asia-focused, UK-based bank has just reported a quarterly loss of $139m (£90.2m), its first in 17 years. Bill Winters, who joined as CEO back in June, faces a tumultuous uphill struggle if he wants to make the company shine again.
The loss is all part of Winters' 'kitchen-sinking' strategy - getting out all the bad news as quickly as possible so he can get on with the business of turning things around. He has wasted no time in that respect. In July he announced a major cull of the bank's top team, centralising power in his own hands, and last month it emerged he was getting rid of 1,000 senior managers.
Today he pushed the nuclear button on a radical plan to assure investors that StanChart's losses can be reversed. In a bid to become 'lean and focused', the bank will get rid of 15,000 jobs by 2018 (or as its deadpan press release put it, 'removing a gross 15,000 roles'). That's a pretty substantial chunk of a workforce that currently numbers around 90,000 people.
Winters will also ask investors to plug a hole in the bank's balance sheet, in the form of a $5.1bn rights issue, and restructure or exit $100bn worth of risk-weighted assets. It's not all slash and burn, though. He plans to use some of the cash to invest in improving the company's digital technology and expanding its presence in China and Africa. The intention is to shift the bank's focus away from 'capital intensive' corporate finance and towards retail banking and wealth management.
Investors don't seem too pleased with being asked to foot the bill. StanChart's share price was down 10% to 642p this morning, having already crashed substantially from a high of 1,094p back in June. The slump probably also reflects surprise at the scale of the bank's loss, which analysts had expected to be a profit of $913m. Winters is making no apologies, though.
'This comprehensive programme of actions will result in a lean, focused and well capitalised international bank, poised for growth across our dynamic and growing markets in Asia, Africa and the Middle East,' he said, before later adding on a conference call that the plans were 'aggressive and decisive'. They will certainly need to be.