Temasek Holdings raises Standard Chartered stake

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

Set 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 filing on Friday.

Standard Chartered gets most of its profit from Asia and spent more than US$2.7 billion since last year on acquisitions, including Hsinchu International Bank (新竹國際商銀) 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 UK rivals such as Edinburgh-based HBOS Plc, which depend mainly on Britain.

'VERY WELL EXPOSED'

"Standard Chartered is very well exposed to the emerging markets, which many view as very exciting," said Teng Ngiek Lian, who manages US$3 billion in 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 £18.62 by 11:23am in London trading yesterday. 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 (US$436 million) at Standard Chartered's closing price of £18.35 on Friday, lift the total holding to 253.7 million shares.

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

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

Israel comment on the Merrill report in yesterday's e-mail. The Journal said on Friday that the Singapore fund would invest in the world's biggest brokerage through a cash infusion.

Merrill US$8.4 billion of writedowns on mortgage-related investments and corporate loans on Oct. 24 and then ousted its chief executive officer Stan O'Neal.

The stock gained 1.9 percent following the report on Temasek's investment.

THRESHOLD

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 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, the annual report said.