Standard Chartered’s abrupt move to shut its global equities business last week could be a prelude to the lender selling off stakes in a number of Asian banks as it looks to boost capital, people familiar with the lender’s thinking said.
The most likely potential sale is Standard Chartered’s $621 million holding in Agricultural Bank of China Ltd (AgBank), Reuters quoted a person with direct knowledge of the situation as saying.
The bank’s 45 percent stake in Indonesia’s PT Bank Permata, valued at around $638 million, could also be sold, though that deal would probably come after an AgBank stake sale, people close to the bank said.
Early this month Standard Chartered moved aggressively to reverse its flagging fortunes by closing the bulk of its global equities business and axing 4,000 jobs in retail banking.
But chief executive Peter Sands is under pressure to cut costs and bolster capital levels further, as the bank grapples with potential losses from commodities loans that could mean it needs $4.4 billion in extra provisions.
“It was an easy decision to get rid of the equities business but there are other things the bank could be doing,” said a former Standard Chartered executive.
The change in the banks fortunes reflects the fact its focus on emerging markets and commodities has flipped from being a strength to a weakness in the current economic climate.
“The tailwinds that benefited Standard Chartered from 2008-2013 became headwinds in 2014,” Jefferies analysts said in a note this week.
Having minority stakes in other banks has become less attractive to lenders like Standard Chartered as new rules mean they now have to hold more capital against those holdings.
Bankers cautioned though that there is no active sale process for any of these assets.
