Temasek raises stake in Standard Chartered to 18%

December 25, 2007
Singapore Democrats

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Chia-Peck Wong
Bloomberg
24 Dec 07
http://www.bloomberg.com/apps/news?pid=20601087&sid=a9kK9GTD37GU&refer=home

Temasek Holdings Pte, the biggest shareholder in Standard Chartered Plc, increased its stake in the U.K. bank to 18 percent, boosting the financial-services investments in its $100 billion portfolio.

Set up in 1974 to run Singapore’s state assets, Temasek also has stakes in ICICI Bank Ltd. of India, Bank of China Ltd. and DBS Group Holdings Ltd., Southeast Asia’s biggest bank. Temasek bought 12 million Standard Chartered shares, raising its holding by one percentage point, the bank said in a Dec. 21 filing.

Standard Chartered gets most of its profit from Asia and spent more than $2.7 billion since 2006 on acquisitions, including Hsinchu International Bank in Taiwan and Union Bank Ltd. in Pakistan. This month, the London-based company said it would accelerate investment in emerging markets, avoiding a potential decline in revenue faced by U.K. rivals such as Edinburgh-based HBOS Plc, which depend mainly on Britain.

“Standard Chartered is very well exposed to the emerging markets, which many view as very exciting,” said Teng Ngiek Lian, who manages $3 billion of Asian stocks as chief executive officer of Target Asset Management in Singapore. “Most of Temasek’s investments in the banking sector are doing very well.”

Standard Chartered rose 1.5 percent to 1,862 pence by 11:23 a.m. in London trading. The stock has gained 25 percent this year, the best performer on the nine-member FTSE All-Share Banks Index.

The shares purchased by Temasek, worth 220 million pounds ($436 million) at Standard Chartered’s Dec. 21 closing price of 1,835 pence, lift the total holding to 253.7 million shares.

“Comfortable” with shareholding

Temasek first bought a 12 percent stake in Standard Chartered from the estate of late Singapore hotelier Khoo Teck Puat in March 2006, and held 13 percent of the bank as of March this year, according to its annual report. It may also invest $5 billion in Merrill Lynch & Co., the Wall Street Journal reported last week, citing unidentified people.

“We are comfortable with our current level of shareholding” in Standard Chartered, Simon Israel, executive director at Temasek, said in an e-mailed statement today. “As a financial investor, we are not involved in the bank’s board and management.”

Israel didn’t comment on the Merrill report in today’s e-mail. The Journal said Dec. 21 the Singapore fund will invest in the world’s biggest brokerage through a cash infusion.

Biggest industry

Merrill announced $8.4 billion of writedowns on mortgage- related investments and corporate loans on Oct. 24, and then ousted Chief Executive Officer Stan O’Neal. The stock rose 1.9 percent following the report on Temasek’s investment.

The latest purchase puts Standard Chartered closer to a threshold that would make it unable to issue notes in Hong Kong. The city will bar lenders that are 20 percent owned by foreign governments from issuing bank notes denominated in the local currency, the Hong Kong Monetary Authority said in July.

Investments in financial services companies accounted for 38 percent of Temasek’s portfolio in the year ended in March, compared with 35 percent a year earlier, making it the biggest industry for the company’s assets, according to the annual report.

To contact the reporter on this story: Chia-Peck Wong in Hong Kong at [email protected]