- Wholesale and Consumer banking merged into one
- Wholesale boss to take charge as Deputy CEO
- Group FD steps down
After its unexpectedly weak fourth quarter, Standard Chartered has reorganised its business units, with three senior directors stepping down.
The FTSE 100 bank said from April 1st it will merge its two business units, wholesale and consumer banking, into one business organised into three customer segment groups and serviced by five global product groups.
Wholesale banking boss Mike Rees has been appointed as Deputy Chief Executive Officer (CEO) and will take responsibility for this combined business, continuing to report to Peter Sands, Group CEO.
Long-standing and highly regarded Finance Director Richard Meddings also felt it an opportune time to depart, and will leave in June, with a successor yet to be appointed.
Broker Investec said the rationale for the departure of Richard Meddings as CFO was not obvious, especially with the group starts from a position of extreme capital strength. "Unfortunately, we fear that bears will seize on this development to 'press the case' for a capital raise. We continue to regard the rationale for any such raise as unfounded."
Analysts at Credit Suisse, on the other hand, did not hold entirely the same view: "We believe these announcements will create further uncertainty on the stock and that our main concern in terms of a weak capital position, has not yet been addressed."
Standard Chartered had indicated it had new strategic aspirations and revised financial performance framework at an investor day in mid-November.
On Thursday the bank announced that its three new customer segment groups would be: Corporate and Institutional Clients; Commercial and Private Banking Clients; and Retail Customers.
In its 2012 results, Corporate and Institutional Clients represented approximately 60% of group income, Commercial and Private Banking Clients 10%, and Retail Customers 30%.
The five global product groups will be called: Financial Markets, Corporate Finance, Transaction Banking, Wealth Products and Retail Products.
CEO Sands said: "The reconfiguration of our business is a critical next step as we implement our refreshed strategy and reinvigorate our growth momentum."
He added: "Today, we are announcing a new model for the organisation of our business. This will sharpen our focus on distinct customer segments, enabling us to deploy capital, liquidity and investment spend more effectively, and deliver both productivity gains and improvements in the quality of the service and products we offer our customers.
"Further changes will take place in the support and control functions as they adapt to the reshaping of the business and regions."
As a result of the reorganisation Steve Bertamini, Group Executive Director and CEO Consumer Banking, will step down from the board at the end of March.
The Group has announced a significant reorganisation of its business by merging the Wholesale and Consumer Banking divisions as well as some major departures from the group with the Group CFO and CEO of Consumer Banking stepping down.
In its note, Credit Suisse questioned the reorganisation: "With Wholesale representing circa 70% of group first-half 2013 PBT and 78% of the group assets it is not clear to us why this should lead to further cost saves at this stage given that this was not part of the strategic announcement in November."
"Separately, we will look for commentary about the operating environment to understand whether this has deteriorated further to prompt this announcement."
StanChart shares, which were strong underperformers last year, were down 4.7% to 1,249.75p by 14:15 on Thursday.