Standard Chartered eyes organic regional growth

22 March 2002

A change of management has altered the pace of regional expansion plans at Standard Chartered Bank.

Following the $1,340 million cash acquisition of the Middle East and South Asian operations of ANZ Grindlays Bankin the summer of 2000, Standard Chartered targeted the Egyptian market and eyed Misr American International Bankbefore submitting the highest bid for the acquisition of Egyptian American Bank (EAB). However, negotiations became protracted and the bank pulled out of the transaction in late December (MEED 28:12:01)

'The decision to pull out of the Egyptian deal was my decision,' said Mervyn Davies, Standard Chartered's group chief executive officer (CEO), in Dubai on 18 March. Davies took over from Rana Talwar as CEO at the end of November. 'It is no reflection on Egypt or the bank [EAB], but rather that it is a new market and I thought it was too early in my tenure to make such a move. Maybe in a couple of years we'll look again.'

The bank has no other firm regional acquisition plans. 'There will be buying opportunities and in the future we will look at them, but at the moment my focus is on extracting more value from what we've already got,' says Davies.

Equally, Davies said there were no plans to alter its position in other Middle East markets, despite some apparent overlaps created by the ANZ Grindlays acquisition. Currently, Standard Chartered has two banking licences in Qatar. 'We are very strong in Qatar and there are excellent opportunities there,' says Davies. 'There are no plans to sell.'

The impetus for future regional growth will come from existing operations. 'The focus has been on consumer banking,' he says. 'We are good at delivering products and solutions and the Middle East is a fantastic part of the bank: the wealth here is enormous and the potential for consumer banking is very strong. It is a part of the world we are more than comfortable with.'

There are also plans to extend the bank's wholesale banking activities. 'We are putting a lot of emphasis on developing our capital-raising activities - we are market leaders in this in other emerging markets - and on local currency bonds,' says Davies. Standard Chartered is understood to be actively seeking a mandate for the proposed debut bond issue from the government of Dubai (MEED 8:3:02; 18:1:02).

The Middle East & South Asia (MESA) operation - which excludes India - is of growing importance to the bank. Headquartered in Dubai, it now contributes about 15 per cent of the group's operating profits.

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