StanChart closures seen to have little buy-side impact

Standard Chartered’s move to close its equity derivative and convertible bond units is unlikely to have major implications for the investment industry or for the UK bank’s own wealth management business, according to individuals AsianInvestor spoke to.

The closures, announced yesterday in an internal memo, continue the group’s efforts to cut non-core operations and boost flagging profits. They follow reports earlier this month that the bank would cut 1,000 of its 4,000 senior staff globally and the January shutdown of its global institutional cash equity, equity research and equity capital markets businesses.

A person familiar with the matter said around 40 employees in Hong Kong could be directly affected, and that the closures were "not a huge surprise" after the exit from cash equities. However, the individual added, the equity derivatives business had been performing well. 

A StanChart spokeswoman in Singapore declined to comment on the number of staff impacted apart from to say: "In the overall scheme of things, the impact of this closure is not significant."

"We continue to provide equity financing advisory, macro research and fixed income research," she added. 

As for the bank’s wealth management and private banking businesses, the spokeswoman said their securities trading services would not be affected by the closures.

“We are committed to providing liquidity on all our products, including those listed on the stock exchange and settling these at their expiry, and we are committed to ensuring that our responsibilities towards our clients, counterparties and the market are appropriately discharged.”

She declined to comment on whether the closures would otherwise impact services provided by the wealth management and private bank units. 

In respect of the new talent coming onto the market as a result of StanChart's move, a Hong Kong-based recruiter said he did not generally see much demand from buy-side firms for equity derivatives sales staff.

“It’s a possibility for some of the bigger houses or investment bank-backed asset managers to appoint these types of salespeople,” he noted. “Less so the pure-play or smaller boutique houses, which need salespeople to hit the ground running in regards to products.”

In the memo, Hong Kong chief executive May Tan said StanChart would execute a “phased closure of ED and CB that will allow us to fulfill our responsibilities, including outstanding Standard Chartered warrants to our clients, counterparties and the market”.