Standard Chartered ended its decade-long hunt for a major acquisition in Taiwan yesterday with the £650m takeover of Hsinchu International Bank (HIB).
The London-listed emerging markets specialist becomes the first foreign lender to buy a Taiwanese bank outright.
The deal, to be funded by a share placing, delivers HIB's 83 branches, 2.4 million consumer deposit accounts and 115,000 corporate accounts to Standard Chartered.
By swallowing HIB, Standard Chartered leapfrogs Citigroup as the biggest overseas bank in a country whose economy is the fourth-largest in Asia and growing by more than 4 per cent each year.
Peter Sands, Standard Chartered's finance director, said: "This is a big, growing, attractive financial market. Taiwan plays a crucial role in the economy of north-east Asia, which we see as a critically strategic region. The bank is well managed, has a network of branches all over the country, with a significant market share in some of the most affluent regions."
The acquisition, Standard Chartered's biggest since buying Korea First Bank for $3.3bn in 2005, comes hard on the heals of a sharp downturn in consumer credit in Taiwan, where bad debts on credit cards have spiralled.
Standard Chartered said that, with credit quality getting better, now was the right time to make the HIB acquisition, slated for completion in November subject to regulatory approval.
"This is something we've looked at for a long time," Mr Sands said. "We have been very careful about which bank to acquire." HIB will be earnings accretive in 2008, he added.
News of the placing - to be handled by Morgan Stanley, Goldman Sachs and JP Morgan Cazenove - saw Standard Chartered's shares marked 29p lower to 1,368p, valuing the lender at £18.1bn.
Simon Maughan, senior analyst at Blue Oak Capital, said: "They have been desperate to do this for a long, long time. In a moment of weakness, one Taiwanese bank has agreed to sell. It is a good deal. It gets Standard Chartered where no one else is. Standard Chartered exists only to grow, and this offers the only real way to grow in that country."
The latest acquisition follows a string of smaller deals. Earlier this month, Standard Chartered agreed to pay $96m for a further 13 per cent of Indonesia's PT Bank Permata, increasing its stake to 44.5 per cent.
In August it bought Pakistan's Union Bank, that country's eighth-biggest, for $511m. Last September, Standard Chartered took a 20 per cent stake in China Bohai bank for $123m.
Standard Chartered is to amalgamate its existing three branches and 900 employees in Taiwan with HIB's 83 branches and 3,300 workers. HIB is the country's seventh-biggest private sector lender.
It will introduce new products, such as wealth management and foreign exchange, to HIB's personal and corporate customers.Reuse content