Standard Chartered wins $1.3bn Chase deal

Standard Chartered, the UK-listed emerging markets bank has beaten off opposition from several Asian banks to buy Chase Manhattan's Hong Kong retail banking and credit card arms for $1.32bn (£897m).

Standard Chartered, the UK-listed emerging markets bank has beaten off opposition from several Asian banks to buy Chase Manhattan's Hong Kong retail banking and credit card arms for $1.32bn (£897m).

It has also announced the sale of Chartered Trust, its British finance subsidiary to Lloyds TSB for £627m.

To help finance the Chase deal, which will significantly expand Standard's Hong Kong credit card business, Standard Chartered is placing new shares equivalent to 4.7 per cent of the bank in a move which will raise £450m net of expenses. The new shares will be placed at 915p, a 4 per cent discount to Thursday's closing price of 954p. The shares rose 9p to 963p yesterday. Standard Chartered stock had been depressed ahead of the announcement which was not unexpected. Lloyds TSB shares fell 20p to 628p.

Rana Talwar, Standard Chartered's chief executive said the deal, which is just the latest in a string of Asian acquisition over the last 12 months, enables Standard Chartered to take a "clear market leadership" position in the cards market in Hong Kong with a 25 per cent share. Chase's Manhattan brand has a strong following among young professionals there.

"It is rare to find such a perfect fit. Hong Kong consumer banking is our most important market. This move adds to our existing strength and builds our consumer franchise," Mr Talwar said.

Chase put the business up for sale following a decision to concentrate on investment banking and asset management in the region. The purchase earlier this year of Robert Fleming, the UK investment bank which has traditionally had a strong Asian operation, has substantially boosted Chase's Asian advisory, securities trading and asset management operations in Hong Kong and South-east Asia generally.

Rival bidders for Chase's Hong Kong business are believed to have included Bank of East Asia, Oversea-Chinese Bank, Development Bank of Singapore, and United Overseas Bank. At a press conference in Hong Kong to announce the deal, Peter Wong, chief executive of Standard Chartered's Hong Kong operations said the bank was considering a separate Hong Kong listing for the merged entity. He also said the bank expects to achieve costs savings of $15m next year rising to $65m before tax in 2003.

Analysts said that the price at 4.5 times net asset value was steep but the deal would fulfil some important strategic goals for the bank. Standard Chartered said the acquisition would be earnings neutral until 2002 after which it will boost profits.