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ICBC Standard aborts plan to shut base metals unit

By Florence Tan and Pratima Desai

By Florence Tan and Pratima Desai

SINGAPORE/LONDON (Reuters) - ICBC Standard Bank has abandoned proposals to shut its base metals business and instead plans to merge it with the precious metals unit to cut costs, the bank told Reuters in an emailed statement.

The bank, a joint venture between Industrial and Commercial Bank of China <601398.SS> and Africa's largest lender Standard Bank <SBKJ.J>, is a major participant in base metals markets globally.

It is restructuring after posting a net loss of almost $130 million in first-half 2019 and in early November mooted the idea of cutting jobs and shutting its base metals trading and equities businesses.

"Following feedback from our clients and shareholders, we will be maintaining our base metals capabilities, whilst achieving some operating efficiencies by merging our precious and base metals business lines," ICBC Standard Bank said.

A staff memo dated Dec. 9 seen by Reuters and sources with direct knowledge of the matter said the U-turn came after objections from majority shareholder ICBC, which controls 60% of ICBC Standard Bank.

One source said the attraction for ICBC when it bought into the joint venture in 2015 was the base metals business, which includes trading derivatives and physical markets, and trade finance.

The memo stated that the bank still planned to close its equities business. "The discussions have not resulted in any change to the equities proposed closure," it said, adding that the bank will proceed with efforts to cut costs and headcount.

ICBC Standard Bank decline to comment directly on the memo.

When ICBC invested in Standard's commodities business, the South African lender had built up the strongest physical presence among Western banks in China and was an active member of the London Metal Exchange.

Late in 2017, ICBC Standard hired Tim Wilson to build the business. Wilson had previously run Standard Chartered's commodity marketing and sales business out of Singapore and worked for JPMorgan.

However, in its mid-year 2019 financial report, ICBC Standard said its base metals business had underperformed, hit by the impact of the U.S.-China trade on markets.

"They've extended the period for making people redundant by between three and six months, depending on their function," one source with direct knowledge of the matter said.

"This gives them the option to keep people on depending on what they decide to do with base metals, what shape the new (business) offering might take."

ICBC Standard declined to give details on how many people were employed in the base and precious metals businesses.


(Reporting by Florence Tan in Singapore and Pratima Desai in London; Additional reporting by Melanie Burton in Melbourne, Mai Nguyen in Singapore and Cheng Leng in Beijing; Editing by Kenneth Maxwell, Edmund Blair and Jan Harvey)