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StanChart Plans To Sell New Shares To Raise $5.1 Billion

Standard CharteredStandard Chartered Bank Plc is one of the three banks accused of manipulating forex rates along with the Royal Bank of Scotland and HSBC. The three banks were fined a combined total of over $900 million for violating forex rules and now StanChart is looking for ways to cut costs and raise fresh capital to manage costs and pay its fines.

The company recently announced that it plans to reduce 17% of its workforce before the end of 2018, a move that is expected to make 15,000 employees redundant and save the bank an approximate of $2.9 billion.

The bank has also confirmed that it will release a new shares in an attempt to raise around $5.1 billion so that the bank can have funds to pay of its fines and manage its expense budget. StanChart will also look to restructure or sell around $100 billion of loans on a risk calculated basis.

StanChart has had a poor third quarter especially in Asia as operating shortfall was around $139 million and considering its growing loan impairments in the Indian sub-continent things do not look very rosy in the near future. The overall revenue for the bank fell by 18 percent when compared to a y-o-y basis. This was also the 5th quarter in a row that the bank reported declining revenues which are partly due to an economic slowdown in Asia.

Bill Winters, JP Morgan’s former investment bank leader has now taken over the CEO position at Standard Chartered and is responsible for steering the bank during these trouble times. He has his work cut out as the previous CEO Peter Sands was sacked after he laid off 4,000 employees but was still unable to turn around the fortunes of the bank.

In a statement, Ronit Ghose, analyst at Citi said

Post restructuring and recapitalisation Standard Chartered will be a stronger and more focused group. But the group will remain a complicated work-in-progress during the upcoming years

This will be the first time in five years that the bank is attempting to raise capital and the rights issue is expected to be launched before the 4th of November at 465 pence per share which is a 35 percent discount when compared to the last London traded price. The bank has confirmed that for every 7 existing shares, 2 new shares will be issued.