12th Dec 2019 11:04
(Alliance News) - Standard Chartered PLC said Thursday it sold off its entire 45% interest in PT Bank Permata Tbk for about USD1.3 billion in cash to Thai commercial lender Bangkok Bank Public Co Ltd.
The FTSE 100-listed Asian-focused lender was looking to offload its stake in the Indonesian bank in order to help cover some of its expected USD500 million of restructuring charges over the next three years.
At the beginning of 2019, StanChart indicated it was hoping to secure USD1 billion for its stake and free up about USD9 billion in risk weighted assets. Currently, the lender has to include all of Permata's assets on its balance sheet but it only benefits from 45% of profit. So, as a result, StanChart decided Permata was "no longer core" and, instead, will focus on its wholly-owned banking subsidiary, Standard Chartered Bank Indonesia, for its ongoing operations in the country.
StanChart and Indonesia's PT Astra International jointly control Permata, each holding just under a 45% stake, giving them a combined holding of just over 89%.
StanChart noted the USD2.6 billion total price for Permata is 1.77 times the bank's book value as of September 30.
"Divesting the stake in Permata is an important part of Standard Chartered's capital optimisation plans, an update on which will be provided at its full-year results on February 27," the lender said.
Chief Executive Bill Winters added: "The sale of our stake in Permata will allow us to focus on our wholly-owned business in the large and strategically important Indonesian market; and will release capital for reinvestment or return to shareholders. This transaction further demonstrates our focus on executing the refreshed strategic priorities we announced earlier this year, at pace."
StanChart noted the deal would improve its common equity tier 1 capital by about USD100 million, improving the ratio by about 50 basis points - by offloading USD9.5 billion in RWAs.
At September 30, the lender's CET1 ratio was 13.5%. The CET1 ratio is a key measure of a bank's financial strength.
The lender did add, however, as the deal will close some time away, the actual gains will be determined at a later date. StanChart hopes to complete the transaction by the end of 2020.
For the 9-month period ended September 30, Permata reported net income of about USD77 million, and contributed USD29 million and USD26 million in net profit to StanChart in 2017 and 2018, respectively.
Shares in Standard Chartered were 2.1% higher in London on Thursday at 705.80 pence each.
By Paul McGowan; [email protected]
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