As we reported yesterday, Standard Chartered is getting ready to cut some costs, and some heads. We can now elaborate on the bank’s precise intentions, having seen a copy of the email sent by CFO Andy Halford to Bill Winter’s global management team two weeks ago, on October 5th.
The contents of the email are as follows:
“As I mentioned to the MT meeting this week, we still have a significant challenge in meeting our external commitment regarding 2018 costs – a commitment we cannot afford to miss. Given the income slowdown we have seen over the last few months and that will likely continue into Q4, we MUST demonstrate our ability to hit our cost targets. We have made virtually no progress since May when we adjusted our budgets in reducing our cost base…..While I appreciate that many steps have already been taken to minimize this gap (and a reduced bonus based on FC2 outcomes might help), more must be done to ensure we end the year at or below $10.2bn in costs, so we each need to close at least half of our budget gaps in the last few remaining months of the year.
The following levers can and should be utilized to achieve this.
- Headcount reductions – while it might not have significant impact on 2018, it is critical that we identify meaningful reductions in senior headcount, especially those in high cost locations.
- Hiring restrictions – no external hires without senior function/business approval.
- Non-employed workers – mandatory holiday period in December.
- T&E reduction – no travel for internal meetings (exceptions for group-wide leadership programmes). No travel without senior function/business approval.
- Reduction in investment spend – not an ideal solution, but one for consideration if the other levers aren’t enough to close the gap.”
The email finishes with a call for business leaders to submit their cost cutting plans by October 10th. So, there are already people at Standard Chartered who know what’s coming next…. With markets slow and revenues likely to end the year lower than expected, Standard Chartered’s management may not be the only ones sending this kind of email in the months to come.
The bank said: “We have previously stated that our second half expenses will be similar to our first half expenses. That remains our view – as we will confirm in our third quarter results update on 31 October”.
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