In an effort to replace “lower-value human capital” with technology, Standard Chartered will eliminate almost 7,000 positions over the course of the next four years.
STAN.L is now one of the leading names in finance to target headcount reductions using artificial intelligence.
In an effort to boost profitability and combat competition, the London-based lender cited AI on Tuesday as a motivator for streamlining its procedures.
StanChart would eliminate 15% of its corporate function positions by 2030, which would mean that over 7,000 of its more than 52,000 employees would be laid off.
It’s not a cost-cutting measure. CEO Bill Winters told reporters, “It’s sometimes replacing lower-value human capital with the financial capital and the investment capital we’re putting in.”
The bank employs close to 82,000 people worldwide. Winters told reporters that when some employees retrain, automation and the use of artificial intelligence will be the main drivers of the decline.
In reference to the retraining option provided to affected employees, Winters stated, “So, the people that want to reskill, that want to carry on, we’re giving every opportunity to reposition.”
StanChart is nearing the end of a ten-year journey to change from a possible takeover target to a consistently profitable lender, and the cuts coincide with increased shareholder return targets revealed in a strategy update.
Early trading saw a 0.5% decline in its London-listed shares, which have increased 65% over the past 12 months, as analysts stated that the new targets were at the cautious end of their estimates.
According to Ed Firth, an analyst at Keefe, Bruyette & Woods, “performance may prove more challenging further out in a world full of uncertainty,” pointing out that the bank has profited recently from high interest rates and significant asset flows.
StanChart’s decision to reduce expenses and streamline operations coincides with more multinational companies eliminating jobs by using AI to boost productivity.
Up to 5,000 job layoffs over ten years were revealed by Japanese lender Mizuho in March.
Additionally, banks throughout the world are rushing to incorporate cutting-edge AI models and combat growing cyber risks.
According to Winters, the bank’s back office locations, such as those in Chennai, Bengaluru, Kuala Lumpur, and Warsaw, will be the most impacted.
He continued, alluding to its ongoing redesign to automate more of its core banking system, “Of course, we’re using AI along the way, and AI will be a huge facilitator and enabler of that.”
CONSERVATIVE GOALS
According to StanChart, it will provide a return on tangible equity (ROTE) of more than 15% in 2028—more than three percentage points more than in 2025—and increase to almost 18% in 2030.
By maintaining its emphasis on higher-margin businesses, such as wealthy retail clients and financial institutions inside its corporate and investment banking division, the bank is supporting its new goal.
Notably, the lender changed its target from 2029 to 2028 to attract $200 billion in net new money. The bank posted its biggest wealth revenue and new client funds during the first quarter.
Even if the prognosis for several of its important markets is clouded by geopolitical uncertainty, StanChart, which concentrates on the Asia-Pacific and African regions, is aiming to provide better growth.
According to analysts, if the Iranian war continues, Asia-Pacific banks may need to increase loan-loss provisions since borrowers are strained by increased energy costs and slower development.
In the first quarter, StanChart allocated $190 million for precautionary measures related to the Middle East situation.
When asked how market and geopolitical uncertainties might affect the bank’s capacity to meet its goals, Winters responded, “We are incredibly resilient.”
The announcement on Tuesday also coincides with StanChart’s attempt to allay market rumors over succession planning following Winters’ 11-year tenure as CEO by stating that he will remain at the company for the upcoming years to implement the most recent plan.
Diego De Giorgi, who left the bank in February after working there for almost three years, was replaced as permanent CFO on Monday by Manus Costello, a veteran of equity research and head of investor relations.
