StanChart slides on dividend fears

Renewed fears of a dividend cut sent Standard Chartered sliding.

Investors had underestimated the drag on StanChart's capital from higher risk weightings on its loan book, according to Morgan Stanley.

With an Asian macroconomic slowdown raising loan defaults from the current low levels, StanChart will have to adjust its default probabilities on existing books, said Morgan Stanley.

It forecast a resultant shortfall on StanChart's capital buffer by 2015, equivalent to $5.5bn in equity or $46bn of risk-weighted assets.

Slower loan growth came at a time when StanChart's capital ratios were being affected by regulatory fines and deductions, said Morgan Stanley, which highlighted that other banks had started to subtract from their capital calculations dividends that had been declared but not yet paid.

By 2015, StanChart's core equity tier one ratio may be as low as 10.7 per cent, leaving it in the third quartile of European banks, the broker forecast.

That may force a 50 per cent dividend cut this year as rebuilding capital buffers takes priority, it forecast.

StanChart slid 1.2 per cent to £12.65 ahead of full-year results on Wednesday, which follow a December profit warning.

Said CLSA: "StanChart must regain investor trust and confidence after two woeful years for the stock. The good news is that the stock is now priced for disappointment."

A trendless wider market resulted in a flat FTSE 100, with the index down 0.57 points to 6,809.7. For February, the FTSE was up 4.6 per cent, its biggest monthly gain since July.

William Hill led Friday's gainers, up 6.1 per cent to 397.6p, after its full-year results beat expectations and chief executive Ralph Topping dismissed market speculation that he could step down earlier than his official retirement date at the end of 2015.

Old Mutual was up 5.9 per cent to 197.1p after the bank it would float its £1.2bn-valued US asset management business this year, subject to market conditions.

Shire fell 2.8 per cent to £33.20 after it emerged that a US court had reopened the drugmaker's patent-infringement suit against Cadila Healthcare over Lialda, a treatment for bowel disease.

Ακολουθήστε το Euro2day.gr στο Google News!Παρακολουθήστε τις εξελίξεις με την υπογραφη εγκυρότητας του Euro2day.gr

FOLLOW USΑκολουθήστε τη σελίδα του Euro2day.gr στο Linkedin

Shire had filed the suit in 2010 to block Cadila from making generic versions of the anti-inflammatory drug, which has key patent protection until 2020 and is expected to provide about 9 per cent of Shire's long-term revenue.

Serco jumped 12.1 per cent to 460.5p after the government outsourcer poached Aggreko chief executive Rupert Soames, the brother of Conservative MP Nicholas Soames.

Aggreko, which has full-year results due on Thursday, dropped 4.3 per cent to £15.60.

Turnround optimism lifted Man Group a further 7.9 per cent to 103.7p a day after the hedge fund manager reported its second positive quarter for flows.

"It may not be a wholly smooth ride from here on but it now looks as if Man Group can be once more analysed as a viable operating company rather than a run-off situation," said Exane BNP Paribas.

Man's reliance on its misfiring AHL fund had been tamed with GLG and the fund-of-funds business accounting for more than half of gross management fees, the broker noted.

Pearson, the textbook and FT publisher, lost 5.9 per cent to £10.13 on a warning that profits will miss analysts' forecasts this year

Takeover target Tullow Oil rallied 4.5 per cent to 799p, though dealers suggested the gain may have been helped by a management roadshow.

Ferrexpo, the Ukrainian iron ore miner, slid 6.6 per cent to 153p after Ukraine moved to protect the hryvnia. Devaluation of the currency would be positive for Ferrexpo's operating costs.

A weakening rouble and tensions over Ukraine meant Lenta, Russia's second-biggest hypermarket chain, had an uninspiring London market debut.

The stock's depositary receipts closed at $9.85 against a $10 offer price, which was the bottom of a reduced price range.

© The Financial Times Limited 2014. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation