- Bank said to need as much as $8 billion to address gap
- CEO said in August there's no immediate need to raise capital
Standard Chartered Plc has held discussions with bankers on raising at least $4 billion as British regulators toughen scrutiny on lenders with exposure to emerging markets in a second round of stress tests, people with knowledge of the plan said.
While the bank has discussed the option of raising capital, no final decision has been made on whether to proceed with a share sale, said the people, who asked not to be identified because the talks are private. The London-based lender may need as much as $8 billion to address a funding gap, according to the people.
Standard Chartered Chief Executive Officer Bill Winters is under pressure to reverse a two-year slide in profit and shares that prompted his predecessor Peter Sands to resign. The bank, which generates almost all of its revenue in Asia, has felt the brunt of a turmoil sparked by plunging commodity prices and concern that China’s economy is slowing more than expected. While Winters has cut the bank’s dividend in half to save $1 billion and pledged to reduce risk-weighted assets by as much as $30 billion by 2016, some analysts forecast a capital gap of as much as $10 billion.
Standard Chartered shares fell as much as 3.8 percent in London, before closing at 723.30 pence, down 2.7 percent. They have slumped about 25 percent this year after losing more than a third of their value over the past two years under Sands. The stock slipped as much as 1.8 percent in early Hong Kong trading on Friday.
Winters, a former co-head of JPMorgan Chase & Co.’s investment bank, said in August that the bank won’t need to raise capital immediately. The bank will decide whether to tap investors after the Bank of England publishes the results of its stress tests on Dec. 1, he said at the time.
This year’s test covers seven U.K. lenders including Standard Chartered, HSBC Holdings Plc, Barclays Plc, Lloyds Banking Group Plc, Nationwide Building Society, Royal Bank of Scotland Group Plc and Santander U.K. Plc. It sets out a “major external shock” to the banking system, including Chinese growth slowing “materially” and plunging commodity prices.
Credit Suisse Group AG, Switzerland’s second-largest bank, said earlier this month that it will raise 6.05 billion Swiss francs ($6 billion) by selling 1.35 billion francs of stock to select shareholders and 4.7 billion francs of shares to existing investors as regulators prepare tougher capital rules.
Standard Chartered is scheduled to release quarterly earnings on Nov. 3.