INDIA BUSINESS WORLD - MARCH 2006
THE MONTH THAT WAS

TEMASEK TO BUY 12% IN STANCHART

TEMASEK Holdings Pte, Singapore's government-owned investment company, agreed to buy 12% of UK lender Standard Chartered Plc from Khoo Teck Puat Estate.tttt Temasek will buy 152.4 million shares of Standard Chartered, a British bank that focuses on emerging markets, the company said in an e-mailed statement on Monday.Khoo Estate is the single-biggest shareholder in the bank.

The transaction has implications for the Indian banking sector. Stan-Chart is the largest foreign bank in India and the subcontinent contributes substantially to the global balance sheet of the British bank. Interestingly, this would be Temasek's second big investment exposure in the Indian banking space. The Singapore government arm owns 10% in ICICI Bank, India's largest private bank. Acquiring 12% stake in Stan-Chart amounts to an indirect exposure to the Indian banking sector.

StanChart has always been bullish on India. In 2000, the bank acquired ANZ Grindlays' operations in India and some of the other markets.Along with the transaction, StanChart also took over the Grindlays' brand.

A possible stake sale by Khoo's estate has been speculated by the international media in the past few years. There have been occasional reports of Citigroup and Barclays buying into StanChart. The present deal is taking place at a point when the Indian banking sector is undergoing a consolidation. The trend will deepen after 2008, when foreign banks are allowed to acquire local private banks .