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StanChart shares slip as stake sale talk resurfaces
September 26, 2012 / 3:56 AM / 5 years ago

StanChart shares slip as stake sale talk resurfaces

LONDON (Reuters) - Standard Chartered (STAN.L) shares fell more than 3 percent on Tuesday as speculation resurfaced that Singapore state investor Temasek may sell its 18 percent stake in the Asia-focused bank.

A staff member walks inside a priority banking service area of a Standard Chartered bank in Hong Kong August 1, 2012. REUTERS/Bobby Yip

The Financial Times said Temasek TEM.UL had sounded out possible buyers for the 6.4 billion pound ($10.4 billion) stake, but was not in active talks to sell it. Industry sources told Reuters on Tuesday they were not aware of any ongoing talks.

Standard Chartered could appeal to rivals such as J.P. Morgan (JPM.N), Industrial and Commercial Bank of China (1398.HK), China Construction Bank (601939.SS), Bank of Communications(601328.SS), or other rivals keen to grab a strong Asian exposure or wholesale banking position, analysts said.

“Standard Chartered (is) widely seen as a unique franchise given its pan Asia/Middle East/Africa footprint and comprehensive wholesale banking product offering,” said Cormac Leech, analyst at Liberum Capital.

Talk that a bank will buy Standard Chartered is nothing new, however, and has been almost ever present since Lloyds TSB (LLOY.L) made a hostile bid in 1986.

“Standard Chartered’s extensive transaction banking franchise makes the prospect of a strategic stake attractive for a bank looking to increase exposure to emerging markets, particularly in the wake of recent capacity withdrawal by European banks,” said Mike Trippitt, an analyst at Oriel Securities.

But there are several obstacles to a takeover or stake purchase, analysts said, citing Standard Chartered’s premium share price valuation, the punitive treatment of minority stakes under new capital rules, and potential resistance from local regulators.

By 1014 GMT Standard Chartered shares were down 3.6 percent at 14.28 pounds, the weakest stock in the European bank index .SX7P, weighed down by the threat of a big share sale, albeit with some support provided by the takeover talk, dealers said.

Temasek and Standard Chartered declined comment.

There was talk in the past few years that Temasek may raise its stake in Standard Chartered, but that has shifted in the last year to speculation it will sell out to profit on the stake it bought six years ago from banking tycoon Khoo Teck Puat and subsequently added to.

Temasek raised S$650 million in October 2011 from the sale of bonds that exchange into Standard Chartered shares, which was seen as a successful deal that could cut Temasek’s stake at an attractive price. It could attempt to repeat that deal if there was appetite and it wants to cut back, one analyst said.

Temasek has said it is looking to buy assets in Europe and pump more money into energy and commodities, prompting talk it could cut its exposure to financial firms.

This year it has pared down stakes in China Construction Bank and Bank of China (601988.SS), but in April it paid $2.3 billion for a share of ICBC.

Temasek, headed by Ho Ching, the wife of Singapore’s prime minister, earlier this year hired former UBS UBSN.VX Chief Financial Officer John Cryan to oversee its strategy for Europe, where the state investor has limited exposure.

Standard Chartered’s shares are trading at near 1.3 times book value, almost double the European average of about 0.7 times. They have largely recovered from a crash last month when New York’s regulator said the bank had hidden transactions with Iran, resulting in a $340 million fine.

Reporting by Steve Slater; additional reporting by Saeed Azhar in Singapore; Editing by Mark Potter

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