Standard Chartered may see white knight takeover on painful recovery: CLSA

Fri Dec 18, 2015 4:27am EST
 
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By Elzio Barreto

HONG KONG (Reuters) - UK bank Standard Chartered (StanChart) (STAN.L: Quote) could be acquired by a white knight as its recovery could prove to be "challenging", according to broker CLSA, which upgraded shares of the Asia-focused lender on that possibility.

Singapore's biggest lender DBS Group DBSM.SI would be the most likely buyer, added CLSA in a note to clients dated Dec. 17. StanChart has seen its shares fall below a forward price-to-book value of 0.5 times this week, making it an appealing target.

The lender, which is in the middle of a restructuring under new CEO Bill Winters, has announced a series of moves to restore its profitability, including axing 15,000 jobs and streamlining the bank's management structure.

"The bank's road to recovery will likely be a challenging multi-year journey. But the worse the situation gets for StanChart, we believe the more likely it is that a white knight will eventually emerge," CLSA analysts Asheefa Sarangi and Lester Lim wrote in the note.

StanChart declined to comment, while DBS said in a statement there was "no basis to the report, and it is not on our agenda". Singapore state investor Temasek Holdings [TEM.UL], the biggest shareholder for both StanChart and DBS, also declined to comment.

CLSA revised its forecasts for StanChart's earnings in 2015, projecting a loss of $142 million for the year, a first for the bank in at least 13 years.

The bank's shares dipped 0.5 percent in early London trading on Friday after soaring 7.3 percent on Thursday, their biggest-one day gain since March. StanChart's stock in Hong Kong (2888.HK: Quote) closed 3.1 percent higher, compared with a 0.5 percent decline in the benchmark Hang Seng index .HSI. DBS lost 1.6 percent in Singapore.

The slump in StanChart's shares this year has pushed its market capitalization to $27 billion, an affordable level for several banks with regional ambitions, the CLSA report added.

(Additional reporting by Saeed Azhar and Denny Thomas; Editing by Muralikumar Anantharaman)

 
A woman walks down the stairs of the Standard Chartered headquarters in Hong Kong in this October 13, 2010 file photo. REUTERS/Bobby Yip/Files