Standard Chartered will eliminate more than 7,000 jobs over the next four years as it seeks to replace "lower-value human ​capital" with technology, becoming one of the top names in finance to target headcount cuts using artificial intelligence.

The London-headquartered lender on Tuesday cited AI ‌as a driver to make its operations slimmer in its goal to increase profitability and tackle competition. Staff at Standard Banks in Chennai, Bengaluru, Kuala Lumpur and Warsaw will be worst affected.

StanChart said it would cut 15% of its corporate function roles by 2030, which, according to a Reuters calculation, would result in more than 7,000 redundancies out of its more than 52,000 staff in such roles.

"It's not cost-cutting. It's replacing in some cases lower-value human capital with the financial capital and ​the investment capital we're putting in," CEO Bill Winters told reporters.

The bank has a total global staff of nearly 82,000. Winters told reporters the reduction ​will be driven by automation and adoption of artificial intelligence as some staff retrain.

"So, the people that want to reskill, that want to carry on, we're giving every opportunity to reposition," Winters said, referring to the retraining option given to impacted staff.

The cuts, alongside higher shareholder return targets announced in ​a strategy update, come as StanChart is at the tail-end of a decade-long effort to transform itself from a potential takeover target to a steadily profitable lender. Its London-listed shares, ​which have risen 65% in the last 12 months, fell 0.5% in early trading, as analysts said the new targets were at the conservative end of their expectations.

"In a world full of uncertainty, performance may prove more challenging further out," said Ed Firth, analyst at Keefe, Bruyette & Woods, citing how the bank has benefited in recent years from high interest rates and huge wealth flows.

StanChart's move ​to streamline operations and rein in costs comes as more global firms slash jobs by deploying AI to improve efficiency. Japanese lender Mizuho in March unveiled up to ​5,000 job cuts over a decade. And banks globally are scrambling to integrate frontier AI models and fend off rising cyber threats.

The most affected roles will be in the bank's back-office centres, including ‌those in Chennai, Bengaluru, Kuala Lumpur and Warsaw, according to Winters.

"Of course we're using AI along the way and AI will be a huge facilitator and enabler of that," he added, referring to its ongoing revamp to automate more of its core banking system.

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Companies and organisations will be required to file tax returns on the income generated by employee welfare funds from the current fiscal year and pay a 27.5 percent tax on the earnings. 

The Income Tax Act 2023 incorporates the provision, lifting the tax exemption and amnesty on the compulsion to file returns for funds such as provident funds, gratuity funds and workers' profit participation funds maintained by the private sector.

The law, however, has exempted government-managed provident funds from taxation, raising questions.

TIM Nurul Kabir, executive director of the Foreign Investors' Chamber of Commerce & Industry, said there were many other avenues to collect tax.

"Employees benefit from provident funds after their retirement. So, the authority should not slap taxes on retirement benefit."

He said while levying the tax, the government has not treated provident funds of the private and public sectors equally.

"It is discriminatory," he said, adding that they would appeal to the tax authority for the withdrawal of the tax on income from provident funds.

Debabrata Roy Chowdhury, director for legal, regulatory and corporate affairs at Nestlé Bangladesh PLC, said the introduction of income tax on trust funds would lower the overall income from such schemes.

"This will have an adverse long-term impact on retired employees of private organisations."

Chowdhury urged the authority to address the issue in line with the spirit of the government's initiatives aimed at ensuring social security for private sector employees.

"The recent introduction of the universal pension scheme for private sector employees is a good example of that."

A senior official of the NBR, on condition of anonymity, said the income of government-managed provident funds was exempted in line with the Provident Fund Act 1925.

He said provident funds under the private sector had been historically exempted and there was no requirement to submit tax returns. As a result, it was unclear whether the funds were properly utilised.

"From now onwards, we will see proper disclosure."

The tax official said the contribution of payroll tax is about 3 percent of the total income tax although it should increase as the economy is growing.

Md Shahadat Hossain, a former president of the Institute of Chartered Accountants of Bangladesh, said income from investment in savings certificates, where people invest as a source of future earnings, is already taxed.

"From that perspective, the imposition of tax on provident and other employee welfare funds seems okay."

However, Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue, said social protection for private sector employees was low.

"Provident and other workers' welfare-related funds provide little social protection. The imposition of tax will increase inequality. But there can't be any discrimination in taxation between private and government provident funds."

Khan, citing the latest income tax law that replaced the Income Tax Ordinance 1984, said the NBR tried to find new avenues to increase tax collection and improve the nation's revenue-gross domestic product ratio, which is one of the lowest in the world.

"We can see the desperation of the tax authority to boost collection. This ultimately reveals the inability of the NBR to catch the tax evaders and illicit money makers."