Banking News

Two-year restructuring leave StanChart in good stead

(9 June 2017 – Asia) In a recent interview with Chinese publication, South China Morning Post, Standard Chartered’s (StanChart) regional chief executive Ben Hung Pi-cheng said the UK-based bank has completed a two-year restructuring process, including divestment or closure of underperforming business units.

Hung said the restructuring has placed the bank in a strong position to explore expansion opportunities, focusing on renminbi-denominated services and financing, and lending involved in the “Belt and Road Initiative”.

“This major restructuring has been aimed at cutting out units which were not profitable, allowing us to relocate our resources to what we are good at. This has included the shut down of our equities business, and sale of consumer finance and MPF units,” he said.

The bank’s staff in greater China and North Asian region has been reduced by 18 percent and overall expenses are six percent down, compared with January 2015 when it first started the restructuring.

StanChart’s bad debt ratio dropped a dramatic 52 percent to US$963 million (A$1.2 billion) in 2015 and US$471 million in 2016.

“The restructuring has cut business volume and loan size. We are now healthier, and so it’s time to expand again,” he said, especially in areas of business linked with China’s continued market liberalisation.

Hung added that he will be growing the bank’s yuan business, via offshore regional treasury centres, and expanding its offshore mainland wealth management services, which on top of its Belt and Road-related work brought in US$1 billion in income last year.

“These areas of business will benefit from China’s opening up and will offer substantial growth over the next five to ten years for our business. They will be our focus,” he said.

Hung said Standard Chartered already operates in 45 markets along the new silk road routes, and is involved in over 100 projects in these countries.

“These range from energy, railways, roads and trade. The Standard Chartered network in Pakistan and other Middle East countries will help investors from the mainland and other markets invest in these projects,” he said.