Standard Chartered halves dividend, says may raise cash

By Steve Slater and Sinead Cruise

LONDON (Reuters) - Standard Chartered halved its dividend and said it would raise capital from investors if needed, as new Chief Executive Bill Winters outlined plans to revive a bank hit by a 44 percent slump in first-half profit.

Asia-focused Standard Chartered (StanChart) has had a troubled three years, hurt by a weakening in many of its key emerging markets as well as fines from U.S. regulators for misconduct and strained relations with top shareholders.

Some analysts have said former JP Morgan investment bank boss Winters needs to raise at least $5 billion to bolster the bank's capital reserves and kick-start a recovery.

StanChart said on Wednesday it would halve its first-half dividend to 14.4 cents a share, and expected to cut the full-year payout by a similar amount.

That would save about $1 billion over the full year, with the first-half cut helping to lift the bank's common tier 1 equity position, a key measure of capital strength, by 80 basis points to 11.5 percent, reaching its 11-12 percent goal six months ahead of target.

Winters said he would seek more cash from investors if necessary. "If we conclude the bank needs capital, we will seek that from our shareholders," he said.

Winters, who became CEO in June, said he was reviewing if the bank's capital was strong enough due to a jump in bad debts, a weak earnings outlook and as the Bank of England will this year carry out a tough "stress test" on banks' Asian exposures.

He said he would set out his plans at the end of the year.

"We will take that body of information and make a decision at the time whether capital is needed," he told reporters on a conference call.

Winters also said improving return on equity would be his main priority and that 10 percent would be "a minimum acceptable level", compared with just 5.4 percent in the first half.

StanChart shares were up 0.2 percent at 954.2 pence at 1010 GMT, after jumping more than 5 percent in early trade.

"The core capital ratio beat versus expectations reduces the risk of a large new equity issuance in 2H15 (the second half of 2015)," Citi analysts said in a note to clients.

"At first glance a lot of the earnings miss appears to be 'kitchen sinking' by the new CEO," they added, referring to the first-half results. Citi have a "buy" rating on StanChart stock.

The bank said pretax profit in the first six months of the year dropped to $1.82 billion and it had "rebased" its dividend to reflect its "current earnings expectation and outlook".

It said it had cut 4,000 staff since the start of the year, or about 5 percent of its employees, as part of its plan to streamline operations and cut costs, and said there could be further cuts. It is aiming for $1.8 billion of cost savings by the end of 2018.

Winters has already shaken up the bank's management structure, streamlining its eight geographical regions into four units that will report directly to him.

(Editing by Mark Potter)