The investor told The Times that the bank should announce a fundraising within months if it believes that it needs to bolster its balance sheet to get ahead of a slew of expected share sales from big British banks.
Bill Winters, the chief executive of the emerging markets lender, has yet to make a final decision on a rights issue after taking over two months ago, but the investor said that he had no time to lose.
“If Bill has any doubt at all in his mind about the bank’s capital, then he must do a rights issue. You only get the chance to do this once and there is no point hanging about. If it needs to be done, it should be done quickly,” the investor, who is among the ten largest shareholders in Standard Chartered, said.
The shareholder made clear that it would be content to support the cash-call and prevent a dilution of its stake.
At its full-year results in March, Standard Chartered set a target of reaching a core capital ratio of between 11 per cent and 12 per cent by the end of this year.
At the end of last year the bank had core equity tier one ratio of 10.5 per cent, down 0.4 of a percentage point year-on-year as a result of a change in the lender’s financial models, the cost of dividend payments and a $300 million fine from New York’s financial regulator for breaches of money-laundering safeguards.
This week analysts at Mizuho Securities, the Japanese broker, became the latest to explore the possibility of a rights issue by Standard Chartered and said that the bank could choose to raise as much as $10 billion. “We expect Standard Chartered to launch a rights issues later this year or early in 2016,” James Antos, of Mizuho Securities, said, adding that the fundraising would “regain investor confidence about the future direction of the bank”.
If the bank launched a $10 billion rights issue, it would force Temasek, the Singaporean wealth fund that is its largest shareholder, to write a cheque for more than $1.7 billion or risk seeing its stake shrink.
Dodge & Cox and Aberdeen Asset Management, its second and third-largest investors, would have to inject about $490 million each to maintain the size of their holdings.
This week Mr Winters announced a reshuffle of his senior management team, stripping Mike Rees, the deputy chief executive, of many of his reporting lines and switching them to himself. The bank is searching for a permanent chief risk officer and a head for its investment bank.
Announcing the changes, the bank said that its managers would develop a plan to address the future performance of the group as it seeks to make $1.8 billion of cost savings before the end of 2017. Mr Winters said that the changes would improve accountability, which he argued had been too diffuse in the past. “We are focused on the bottom line and there is plenty we can do on costs,” he said.
“We also have to rationalise our capital base and look at how we can differentiate our business from our competitors. I have been very clear with everyone that we should only be in businesses where we have a distinct offering.”
