StanChart; Derisking vs. Equity Buyback Will Determine Spread Moves. Results 23-Feb.

Standard Chartered (STAN LN) is reshuffling management at its transaction banking business, indicating a wider restructuring upcoming, likely with increased equity payout. Key to spread moves will be the balance between the derisking of this business vs. the quantum of a new equity return plan. We should find out more on 23-Feb with results.

• Press started reporting on 13-Feb that the CEO is looking at restructuring the institutional banking business, which accounts for as much as 60% of group revenues but shows lower returns that the consumer bank.
• Transaction banking is nearly 25% of group revenues and is often seen as the higher quality part of the institutional business with lower volatility than the financial markets business.
• In common with Barclays, StanChart is viewed as being hobbled (in terms of group returns) by this return profile across its businesses and CEO Winters is under pressure from the underperformance of the equity (lags HSBC by 15pp over the last year, and the Eurobanks by over 25pp).