Chillin' out till it needs to be funded
The Singapore Government’s International investment fund, which bought into some Chinese banks and Citi and Stan Chart during the crisis is having serious rethink of its investment in Emerging market prince Standard Chartered. meanwhile, “big brother ” GIC which invested in UBS And brought the bank home to Singapore for its AGM this year has been investing in BTG PActual of Brazil , the largest Investment Bank offering and also apprently int he latest Santander offering in Mexico
Euro Services PMI also has not dampened their enthusiasm for UBS even as both Singapore funds cash out on their bank holdings booking profits and buying back into Chinese banks with less than 5% holdings in each
Temasek bought Stan Chart in 2006 ahead of the crisis and the bank did not face funding pressures thru the crisis years as growth challenges overtake the sector’s searing pace of growth expected to outlast the crisis though on new terms targeting a still elusive 12% return on equity for larger banks. Singapore has also been sweetening the pot for international currency and commodity derivatives contracts as Volcker Rule and now Liikanen report for the EU make it tough to trade in derivatives esp with Volcker imposing Clearing and Capital restrictions and Liikanen recommending Trading ring fencing for banks. Though the crisis clouds have passed, the investor wants the bank to cut down the number of active bank officers on the bank’s board according to a WSJ report. Currently the bank has been asked to reduce its Executive Directors from 6 by June 2013. The bank has a 16 member board which means only 10 “independent” Directors have been red flagged by the investor. meanwhile banks including Goldman Sachs are looking to increase Executive presence on the board to deliver the complex business model to investors and independent board members while active investors look to squeeze banks from coming back to more unbridled profitability techniques they blame the banks for causing the crisis.
Temasek holds 18% of the British Emerging markets rich bank which has failed to grow except in the China trade in Yuan and pockets in retail banking in the Middle east and Africa on a small base. Stanchart was hit by NY state accusations regarding circuitous transactions dealing in Iranian transactions and a $340 settlement just about saved ts face this September after a flash crash affected its share value by more than 20% A week ago, analysts were hoping JP morgan or a Chinese Top 4 bank ould find a deal for StanChart interesting. China Cnstruction Bank was also looking to snag an international franchise but wants one in the Developed world with a strong branch network
JP Morgan and Goldman Sachs have been looking at more opportunities to grow size in Asia esp India and China s the regulatory environment in the two countries allows them more freedom to operate. Asian regulatory environment remains complex however wwith HSBC and StanChart being the only successful M&A acquirers in the region apart from a rare Malaysian play as digesting the regulatory diversity from Australia to China, India and Indonesia, Thailand and Malaysia among others stifles more adventurous suitors despiute the flurry of European Banks looking to sell out somple operations across the continent.