Top investor Temasek willing to give StanChart time for turnaround

Wed Dec 16, 2015 4:24pm EST
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By Saeed Azhar

SINGAPORE (Reuters) - Temasek is willing to give Standard Chartered (STAN.L: Quote) time to work on its turnaround before deciding on the fate of its underperforming $4 billion stake in the UK bank as part of a portfolio reshuffle, people familiar with the matter said.

Pressured by weak returns from low interest rates and a commodities rout, the Singapore state investor is taking a hard look at its $190 billion portfolio and may exit unprofitable assets, these people told Reuters.

This approach was evident last week when Temasek [TEM.UL] sold at below book value a controlling stake in shipping firm Neptune Orient Lines (NOL) NEPS.SI, its biggest disposal since 2009.

Standard Chartered (StanChart), in which Temasek is the biggest shareholder with an 18 percent stake, has launched a painful restructuring under new CEO Bill Winters after being hit by bad loans in emerging markets and suffering a 70 percent tumble in its shares over the past two-and-a-half years.

"Temasek is giving them time. They've had a lot of engagement with the board, and Bill has sort of managed expectations in terms of turning this ship around," said one of the people familiar with Temasek's thinking.

Temasek declined to comment.

It was not clear how long Temasek will wait to see the results of the restructuring.

By subscribing this month to its allotted portion of Standard Chartered's $5 billion share sale, the Singapore investor has buttressed that position for now. But Temasek may become increasingly uncomfortable with the investment if shares in the bank do not recover.   Continued...

A staff member is reflected in a Temasek Holdings logo at their headquarters before the presentation of Temasek's annual review in Singapore in this September 17, 2009 file photo.   REUTERS/Vivek Prakash/Files