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Standard Chartered looks to get slimmer

LONDON — British banking giant Standard Chartered is nearing deals to sell about half a dozen units in Europe, Asia and the Middle East, as part of an effort to combat an emerging-market slowdown and worries about the bank’s financial health, said people familiar with the matter.

LONDON — British banking giant Standard Chartered is nearing deals to sell about half a dozen units in Europe, Asia and the Middle East, as part of an effort to combat an emerging-market slowdown and worries about the bank’s financial health, said people familiar with the matter.

StanChart is in advanced talks to sell Standard Chartered Savings Bank and Standard Chartered Capital in South Korea, said the sources. The bank is also preparing to make an announcement soon about having sold its Lebanese retail bank, they said. It is not clear who the buyers for the South Korean or Lebanese units will be.

Although it is headquartered in London, StanChart generates 90 per cent of its profit in Asia, the Middle East and Africa. Other businesses on the block include StanChart’s Hong Kong consumer finance business called PrimeCredit, its German consumer bank and its Swiss private bank, the sources said.

The sales are the latest in an abrupt turn in fortunes for StanChart. Until recently, the bank’s focus on emerging markets helped it avoid the problems that have dogged many European banks and made it a darling of investors. But turbulence in many of StanChart’s markets has walloped its shares, which are down 31 per cent over the past year amid concerns that the bank needs more capital to absorb potential losses. On Monday, StanChart shares fell 1 per cent to £12.52 (S$26.59) each in London.

South Korea has been a particular headache for the bank, partly because of a government programme that allows borrowers to restructure debts. The bank wrote down the value of its business there by US$1 billion (S$1.27 billion) in the first half of last year and said it expected to post a full-year operating loss in the country of as much as US$200 million.

StanChart is scheduled to report its 2013 full-year results today: The lender had warned in December that annual operating profit would be less than 2012’s US$6.8 billion.

Chief Executive Peter Sands has pledged to sharpen the bank’s focus and stop wasting capital. The bank has also been pruning employees: Last year, its workforce shrank to 87,000 employees from 89,000.

The businesses StanChart is selling are mostly small. The South Korean units have a combined book value of about US$145 million but are expected to be sold at a discount, said the people familiar with the deals. The Lebanese bank is valued at roughly US$20 million. StanChart’s market capitalisation, by contrast, is more than £30 billion.

“The good news is that if management wants to build capital by sell-downs, hidden value exists,” said Mr Jason Napier, an analyst at Deutsche Bank. He calculates that StanChart made nearly three dozen acquisitions from 1999 to 2011, many of which are now valued at more than their purchase prices. DOW JONES

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