US$860m acquisition of AEB yields 10,000 customers, US$22.5b of managed assets
Standard Chartered Bank's acquisition of American Express Bank (AEB) catapults it into the big league of private banking. But what does its biggest shareholder, Temasek Holdings, think about it?'We have informed Temasek about the acquisition and they have always been a strong supporter of our management and strategy,' a Stanchart spokeswoman said yesterday.
Stanchart, 17 per cent owned by Temasek, is paying US$860 million for AEB. The combined entity's assets under management (AUM) will come to US$30 billion, putting it among the top 10 private banks serving the rich in Asia.
In netting AEB, Stanchart will gain 10,000 customers, US$22.5 billion of AUM and more than 120 relationship managers serving 20 offices in four continents.
Asked about the deal, Temasek spokeswoman Lim Siow Joo said: 'We do not get involved in the day-to-day operations of our portfolio companies. Standard Chartered has its own board and management to make independent decisions based on what makes sense for its business.'
At a news conference yesterday, Stanchart global private bank head Peter Flavel said that the acquisition would fast-track the private banking unit, which was launched this year.
AEB has a presence in many of the markets that Stanchart is targeting, he said. AEB markets to non-residents in London, is strong in Dubai, India, Singapore and Hong Kong and has a Miami office that serves mainly Latin America.
It also has a European booking centre in Geneva and two trust companies, in Guernsey and the Cayman Islands - all of which figure in Stanchart's plans for its private bank.
'In our London marketing to non-resident Indians, non-resident Pakistanis, non-resident Koreans and non-resident Taiwanese, they like the idea of booking closer to them,' said Mr Flavel.
Stanchart already has two booking centres - in Singapore and Hong Kong.
Private banks have been jostling with one another to sell to wealthy Asians, of whom there are an estimated 2.7 million, according to the 2006 Merrill Lynch-Capgemini World Wealth Report.
The integration of the two banks will take 24 months. And Mr Flavel said that there would be a period of consolidation.
Stanchart had said earlier that it aims to have 350 to 450 private bankers by 2010. It has so far taken on 150.
Asked if AEB would drive the combined entity's private banking business, given its experience, Mr Flavel said: 'We're pleased with our new private bankers. They're delivering at the rates we set.'
As for their new AEB colleagues, he said: 'They can now look to us for a network to market into.'
Stanchart's core business is banking, and there will be 'little overlap in clients', he said. 'Our clients come to us through referrals from the corporate banking.'
They are mainly first and second generation entrepreneurs, and the average age of a Stanchart millionaire client is 34.
On the outlook for Asian private banking amid market turmoil, Mr Flavel expects 'overall growth of a high single digit'.
Private banking in Asia has powered ahead at double-digit rates in the past three years.
'We are still mildly bullish in terms of the global economy and we believe in the continued growth of the Indian and the Chinese economy,' Mr Flavel said. 'The wild card is the state of the American economy.'
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