Standard Chartered Bank has acquired the Middle East and South Asian operations of ANZ Grindlays Bank for $1,340 million in a cash deal. Through the purchase, Standard Chartered will boost its presence in a number of markets where it is well established, and also expand into some new markets (MEED 28:4:00). In terms of assets, Standard Chartered will be the largest foreign bank in India, Pakistan and Bangladesh and second only to HSBC in the UAE. It will have a total of 2.2 million customers.

'The merger will create both revenue and cost synergies,' says a Standard Chartered official in London. 'Some of the systems used at ANZ Grindlays are more effective and they will be integrated into the Standard Chartered processes.' He says between 25-30 per cent of the benefits of the acquisition will come on the revenue side.

However, there will be some consolidation of the branch networks of the two institutions. 'The due diligence has been done at the top end, but there will be some rationalisation of branches and IT systems. But it is still early days and individual opportunities have not been identified,' says the official.

For the next few years, the Grindlays name is to be incorporated into the brand. 'We expect Standard Chartered Grindlays will be the name put on the branches,' says the official. 'The Grindlays name has very good brand equity, but it might eventually be dropped.'

The acquisition includes the purchase of Grindlays Private Banking, which is closely associated with the bank's retail operations. It will be fused with Standard Chartered's priority banking division. In addition, an exclusivity agreement has been reached, whereby ANZ Investment Bank will continue to provide its expertise for structured financing requirements thrown up by the new entity's regional network.

The deal has cast some doubt over the vigour with which Standard Chartered will continue its pursuit of Egypt's Misr America International Bank (MEED 14:4:00). Standard Chartered is among the four bidders, but it is understood that a declining interest in the acquisition may have been conveyed to the Egyptian authorities. In the longer term, Egypt is certain to remain on Standard Chartered's list of desirable markets, but for the moment its attention will be focused on the integration of the Grindlays network. 'This is a big mouthful, and it will take some time to digest,' says the official.