Stanchart In US$1.1b Deal To Buy American Express Bank

Source : The Business Times, September 19, 2007

Big boost to private and correspondent banking services

(SINGAPORE) Temasek Holdings' 17 per cent owned Standard Chartered has bought American Express Bank to boost its private banking and correspondent banking services.

American Express Co is selling its international banking subsidiary, the American Express Bank (AEB) which has a presence in 47 countries, in a deal worth US$1.1 billion.

The sale does not include any of American Express Co's card or travel businesses or its international financial services businesses that operate separately from AEB.

Statements last night from Stanchart and American Express Co said the total cash consideration is equal to the net asset value of AEB at completion plus US$300 million.

At June 30, 2007, this would have amounted to about US$860 million.

Stanchart said AEB will boost the group's transaction banking business and accelerate its recently launched private banking growth strategy by 'about three years'.

AEB has more than 10,000 private banking clients with total assets of about US$22.5 billion under management.

It has 120 relationship managers in locations that cover 60 per cent of Stanchart's existing footprint.

Stanchart has 150 relationship managers in eight markets including Hong Kong, Beijing, London, Dubai and Mumbai.

Stanchart said its network will be boosted by the acquisition, as AEB will bring with it valuable branch licences in India and Taiwan, subject to regulatory approval.

The group will also gain access to new growth markets such as Kazakhstan and Egypt where it currently has no presence.

In addition, Stanchart's financial institutions transaction banking business will get a major boost from the AEB purchase.

The acquisition will double Stanchart's US-dollar clearing business, reinforcing its position among leading global US dollar clearers and ranking the group sixth globally.

AEB will also provide Stanchart with direct euro and yen clearing capability and opportunities to cross-sell.

AEB has local and regional offices in Singapore, employing about 360 people.

A Stanchart spokeswoman told BT that integration of AEB into the group will take about six months and it will be business as usual until early next year.

'The people impact will be assessed over the next six months,' said an Amex source.

Founded in 1850, the American Express Co offered the world's first travellers cheques in 1891. Its card business only began in 1958.

Last year, the global payments, network and travel company sold US$19 billion of travellers cheques.

In Singapore, the company has 1,200 staff, including the 360 at AEB.