Berenberg downgrades Standard Chartered over restructuring concerns

London analysts at Berenberg bank downgraded Standard Chartered to a ‘hold’ rating based on the ongoing restructuring programme at the bank, as well as concerns about the need to restart its capital return.

StanChart’s target price was also cut from 750p to 725p, reflecting the costs of restructuring.

Berenberg pointed out that the bank has achieved a huge amount in a short space of time, but it did not see adequate room for growth throughout the next 12 months.

To trade closer to tangible book value the bank is "likely to need significant capital return to start and revenue growth to pick up, without a consequent pick-up in credit losses,” the note said.

“However, this seems at least 12 months away, with little capital return to reward investors in the meantime.”

Dividends and share buy-backs are the most likely way for Standard to go back to capital return, according to the German bank.

Increasing issues concerning the liquidity of the US dollar could also affect its share price in the next twelve months.

“While a tightening of USD liquidity should be beneficial for STAN due to its USD clearing activities, our concern is that were the USD to strengthen significantly as a result of USD shortages, STAN could fall as investors grew scared of the potential impact.”

Standard Chartered’s share price was 0.37% lower as of 11:09 GMT on Thursday following the recommendation change.