Page 15 - BANKING FINANCE JANUARY 2016 ONLINE

ROUNDUP
StanChart posts $139 m loss in Q2; to axe 15,000 jobs
Shares of Standard Chartered plum-
meted, as the Asia-focused bank
posted its first quarterly loss in a de-
cade and-a-half, announced a 3.3 bil-
lion pound fully-underwritten rights is-
sue and unveiled plans to overhaul its
structure and restore profitability in-
cluding the loss of some 15,000 job glo-
bally.
Shares were down over 8 per cent in
London, after the bank posted worse-
than-expected results for
the third quarter ending in
September - a loss of $139
million, against a pre-tax
profit of $1.5 billion in the
same period a year ago.
"The business environment in our mar-
kets remains challenging and our re-
cent performance is disappointing,"
said CEO Bill Winters, the former JP
Morgan Investment banker who re-
placed long-running CEO Peter Sands
earlier in 2015.
Since taking over, Winters has pledged
a fundamental overhaul of the bank,
including a review of all businesses, and cused, well capitalized and profitable
SEBI outlines new listing norms for exchanges
Paving the way for stock exchanges to
list, SEBI recently outlined the broad
guidelines for an initial public offering applicable to stock exchanges.
(IPO) by bourses. The secu-
rities market regulator has
made it mandatory for stock
exchanges to ensure that
the minimum public
shareholding is at least 51
per cent.
Trading members, associates and
agents can hold the balance 49 per
cent. Both BSE and NSE are looking to
float an IPO with the former already
seeking SEBI's approval for the listing.
The regulator has also permitted list-
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a reduction in management layers. In
October he announced that around a
quarter of the top 4,000 most senior
positions could be eliminated. Now the
bank estimates that 15,000 positions
will go globally - a sizable chunk of its
90,000 workforce.
The bank is looking at around $2.9 bil-
lion in further cost-cutting before 2018.
It will sell or reposition around $100
billion of risk-weighted assets. There
will also be no end of year rise close to, or over, Rs. 1,30,000
dividend in 2015.
These moves, along with
the capital raising will
raise the bank's Tier 1
core ratio (a closely watched measure
of its capital position) to around 13.1
per cent from 11.5 per cent - just
above its target of 12-13 per cent.
The capital raising will go towards this,
as well as the $4 billion in restructur-
ing and business transformation costs.
Winters said the moves will transform
Standard Chartered into a "lean, fo-
bank."
ing of depositories, which will be gov-
erned by the same norms as those
This could help BSE and
NSE reduce their
shareholding in Central
Depository Services Ltd
(CDSL) and National Secu-
rities Depository Ltd.
BSE holds 54.2 per cent in CDSL and
has to pare its stake as per a SEBI di-
rective asking stock exchanges to lower
their holdings in depositories to 24 per
cent. The three-year deadline has ex-
pired and both the BSE and the NSE
are looking for investors.
Food subsidy bill to hit
govt finances
The Finance Minister Arun Jaitley
and his Budget team will have to do
some more
financial
jugglery as
the already
stressed exchequer is under further
pressure from the food subsidy bill.
The Centre's subsidy costs in 2016-
17 are expected to see a significant
crore as all 36 States and Union Ter-
ritories are expected to implement
the National Food Security Act by the
end of the current fiscal.
Activities in the BSE
house
The Bombay Stock Exchange (BSE)
had announced
that Adani Ports
and Special Eco-
nomic Zone and
Asian Paints will
be included in
the 30-share BSE Sensex, effective
December 21. These two stocks will
replace Vedanta and Hindalco.
NHPC, Jaiprakash Associates and
Unitech will be dropped from the
BSE 100 index and the S&P BSE
Carbonex. Various changes have
been made to other BSE indices. The
BSE 100 will see the inclusion of Bri-
tannia Industries, Bharti Infratel and
Motherson Sumi Systems.
Around nine companies will be re-
placed in the BSE 200 index, while 22
will be excluded from BSE 500.
Muthoot Finance, Unitech and IFCI
will be excluded from BSE 200, while
IDFC, Pfizer India and Adani Enter-
prises will be included.
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