Standard Chartered's biggest investor, the Khoo family, ended months of speculation last night by agreeing to sell its near 12 per cent stake in the emerging markets bank to Temasek, the investment arm of the Singaporean government.
The sale of the £2.3bn stake, details of which were made public after the markets in London closed, is likely to fuel hopes that a takeover offer may soon follow.
The Khoo stake has long been regarded as a stumbling block to any potential bidder such as Citigroup, the world's biggest financial group. However, Standard Chartered looked to nip any bid speculation in the bud and insisted the Singaporeans, who recently tried to buy the ports operator P&O, were long-term investors but not after overall control.
No details were given of the price paid by Temasek, but it is thought the Singaporeans paid a small discount to yesterday's closing price. Standard Chartered shares closed down 7p at 1,524p.
The sale ends months of uncertainty about the plans of the Khoo family after the death of the family patriarch, Khoo Teck Puat, two years ago. He had held a 13 per cent stake in Standard Chartered. His death in 2004 ignited speculation that the shares could be sold in the open market, which could have opened the door for any would-be predator.
Standard Chartered's fortunes have improved in recent times under its chief executive, Mervyn Davies. In 2005, the shares performed better than those of any other London-listed bank.
According to the bank's annual report and accounts released yesterday, Mr Davies was paid $4.3m (£2.5m) last year, 6.2 per cent more than in 2004. His basic pay was $1.47m, with a cash bonus of $1.77m, benefits of $64,000 and an award of shares worth $961,000.
This month, Mr Davies unveiled record annual pre-tax profits of $2.68bn, 19 per cent higher than in the previous year. Those figures were bolstered by a maiden contribution from its major Korean acquisition, KFB, which was renamed SC First Bank.
Standard Chartered fought off competition from the likes of HSBC and Newbridge Capital, a US private-equity group, to land the Korean bank. That acquisition added 38,000 accounts and $4bn of mortgage sales in 2005, when a dozen new products were launched. Mr Davies would not rule out further buys in countries such as Taiwan and South Africa if the right opportunities were to arise. "I feel we have the depth and capability to do more acquisitions and we have shown we have delivered on KFB," he said at the time.
Emerging markets grew strongly in 2005, and Standard Chartered made record profits in Hong Kong on the back of deep cost-cutting and booming spending by tourists in shops and on homes. Profits in China surged 80 per cent. Standard now employs 40 per cent more workers - 1,200 staff - in mainland China in the run-up to the country's entry into the World Trade Organisation.
However, Standard Chartered took a bigger hit on losses on consumer loans in Taiwan and increased competition in India, putting margins in unsecured lending under pressure there.
But the bank is in talks with the Indian government about expanding its operations on the subcontinent, and plans to offer new private banking facilities to India's burgeoning middle classes.
A weak economy in Zimbabwe dampened performance in Africa, but Mr Davies expected the bank to benefit from Chinese connections there. Increased trade between the Africa and China would have "huge benefits" for Standard Chartered, he said, with few rivals being strong in both regions.
Temasek is no stranger to controversy in that region. China recently decided to halve the Singaporeans' proposed 10 per cent investment in Bank of China because of mounting concerns over Singapore's growing influence in the local banking sector.Reuse content