StanChart vies for a bigger play in Singapore with latest consolidation move

The Standard Chartered Plc logo is displayed atop the Standard Chartered Wealth Management Centre, foreground, as Two International Finance Centre (IFC) stands in Hong Kong, China, on Saturday, Feb 16, 2019. Photographer: Anthony Kwan/Bloomberg

Standard Chartered Bank (Singapore) Limited’s (SCBSL) recent consolidation move is expected to see it make a bigger play in the city-state’s banking space while some observers have even predicted that it could pave the way for a major domestic listing similar to what the parent firm did with the Hong Kong operations.

SCBSL announced, by way of a public gazette on March 20, 2019, that it will consolidate its entire commercial banking, corporate and institutional banking, and private banking businesses into its retail banking subsidiary.

The consolidation move is expected to be completed by May 13, 2019.

This will not be the first major consolidation move that the bank’s Singapore subsidiary has undertaken. Back in 2013, when SCBSL commenced operations as a wholly-owned Singapore-incorporated subsidiary of its parent company, Standard Chartered PLC, it transferred the retail banking and business banking businesses, as well as part of its commercial business to SCBSL.

Later, in February 2018, SCBSL formally announced its intention to consolidate its business in Singapore and the exercise was initiated a year later in March 2019.

“Operating from a single entity will increase efficiency, and reduce operational and process complexity. A unified balance sheet will also give us more scale and flexibility to optimise our funding decisions. The consolidated entity will be a well-capitalised Singapore-regulated bank with strong liquidity,” said a StanChart spokesperson on the latest consolidation move.

As part of the business transfer, StanChart Group will inject more than $2.5 billion in CET1 capital into SCBSL. The new capital, together with the transition to advanced modeling for risk-weighted assets, will result in the capital position increasing by approximately three times, the bank’s spokesperson added.

However, SCBSL would still need to look at its key financial benchmarks that are still lagging behind its local banking peers like return on equity (ROE) measures, credit quality measures, and the all-important Common Equity Tier One (CET1) ratios. In this article, DEALSTREETASIA takes a look at some of these key parameters:-

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