StanChart equities closure is overdue but welcome

Hong Kong

FOR most investment banks, underwriting and broking equities is a poor business. Revenue rarely exceeds the costs of providing the service. Yet, most institutions insist that the business is essential. Standard Chartered just became a rare but welcome exception.

The emerging market lender has decided to close its institutional equities division, cutting 200 jobs and saving itself roughly US$100 million a year. StanChart had previously pledged to achieve cost savings of at least US$400 million in 2015. The bank is dismantling its institutional stock broking, equity research and equity listing desks worldwide. Most of the bank's corporate clients will barely notice - last year, StanChart arranged equity issues worth little more than US$2 billion in Asia-Pacific, according to Thomson Reuters, ranking a lowly 23rd in the industry league tables. Market leader Morgan Stanley handled almost 10 times the volume in the region.