Standard Chartered is in talks to sell $4.4 billion of assets in Asia to improve its balance sheet, according to Bloomberg.
Bloomberg reported that $1.4 billion of the total were stressed loans made to Indian firms including GMR Infrastructure, while the remaining $3 billion were loans, proprietary bond and equity investments in China, Indonesia and Malaysia.
“This is a positive move to show investors that the bank and Bill Winters are doing something to improve their operations and capital position,” Ronald Wan, chief executive at Partners Capital International in Hong Kong, told Bloomberg. “Investors have been concerned about StanChart’s asset quality in India, and they are now showing efforts to resolve the problem loans there.”
In February, the bank reported its first annual loss since 1989 as revenue fell and loan impairments nearly doubled to the highest in its history. About $1 billion of low-yielding assets in India was sold to rebalance its account, reported Bloomberg.
“We said in November, when we announced our strategic review, that we would be aligning our risk profile to the new strategy, and confirmed then that the group had identified a number of exposures for liquidation that exceeded the new risk tolerance levels” the bank told PDI in an email. According to Bloomberg, the bank planned to reduce $30 billion of risk-weighted assets in specific countries to improve returns, while it will liquidate another $20 billion of assets that are outside its risk tolerance. It will also seek to exit or improve returns on another $50 billion of assets relating to less-profitable corporate and commercial banking customers.
Recently, banks have been under pressure to improve their balance sheets. Local press reported that Royal Bank of Scotland is closing its corporate banking operations in India as an effort to reduce expenses and to boost earnings after eight straight years of losses.