9th Aug 2006 15:38
Standard Chartered PLC09 August 2006 STANDARD CHARTERED ACQUISITION OF CONTROLLING SHAREHOLDING OF UNION BANK London, 09 August 2006 - Standard Chartered PLC ("Standard Chartered" or the "Bank") announces that its subsidiary company, Standard Chartered Bank (Pakistan)Limited ("SCBP"), has entered into agreements to acquire an 80.86 per centinterest in Union Bank Limited ("Union Bank") for a cash consideration of USD413 million (the "Acquisition"). The Acquisition is unconditional but before itcan be completed, SCBP is obliged, pursuant to Pakistan law, to make a mandatorypublic offer (the "Tender Offer") for the remaining shares of Union Bank. TheTender Offer is expected to commence on or about 12 August 2006 and is expectedto close on or about 1 September 2006 ("Closing"). The Acquisition is expectedto complete shortly after Closing. KEY POINTS • The acquisition of Union Bank will make Standard Chartered the sixthlargest bank in Pakistan by market share of assets and will further extendStandard Chartered's business in a high growth market. Standard Charteredcurrently has a network of 46 branches in 10 cities. Pakistan is an integralpart of Standard Chartered's Middle East and Other South Asia strategy and theacquisition will make Pakistan Standard Chartered's tenth largest geography byincome. • The Pakistan banking sector has low penetration rates and a growingprofit pool that has doubled between 2004 and 2005. Union Bank provides StandardChartered with a significant opportunity for growth in both Consumer andWholesale Banking through product innovation and by leveraging StandardChartered's international network. • Union Bank is the eighth largest bank in Pakistan by market share.It serves approximately 400,000 retail customers through its extensive networkof 65 branches in 22 of Pakistan's major cities, and operates a small butgrowing Wholesale Banking business. • Union Bank has demonstrated an impressive period of growth since itsestablishment in 1991, particularly in the retail and Small and MediumEnterprise banking market, where it now holds strong market shares in mortgages,credit cards, personal and auto loans. Union Bank benefits from a strongindependent local management team with a wealth of experience from leadinginternational banks. • The combined entity of Standard Chartered and Union Bank willdeliver economies of scale, a more complete product set, a stronger operatingplatform and a wider distribution network. • The purchase price is 17.1 times Union Bank's reported after taxearnings in 2005 and 5.6 times its reported net asset value as at 31 March 2006. • The acquisition of Union Bank is expected to be earnings accretivefor Standard Chartered in 2006. • Standard Chartered will finance the acquisition and tender offerthrough internal resources. Bryan Sanderson, Chairman of Standard Chartered, said: "Pakistan is a strongly growing country that is integral to Standard Chartered'sMiddle East and Other South Asia strategy. The acquisition of Union Bank willsignificantly increase Standard Chartered's presence in this important market." Mervyn Davies, Group Chief Executive of Standard Chartered, said: "Standard Chartered is the leading international bank in Pakistan and Union Bankwill materially enhance its market position. Union Bank has grown well under itsstrong management team, and we will drive further growth by adding StandardChartered's products and processes as we have done successfully in othermarkets." Pakistan and Union Bank Union Bank represents an opportunity for Standard Chartered to extend itsexisting footprint in Pakistan and obtain a significant presence in a highgrowth market. Pakistan has shown real GDP growth of between 5.5 per cent and 8.5 per centsince 2003. Standard Chartered forecasts an average GDP growth in excess of 6per cent every year for the next five years. Standard Chartered estimates thebanking sector profit pool at USD 1,100 million in 2005, having doubled over thelast year. The low penetration rates that exist in the sector (loan/GDP ratio of30 per cent), and the demographic profile, make Pakistan an integral part ofStandard Chartered's strategy. Union Bank is Pakistan's eighth largest bank by market share of assets and hastotal assets of USD 2 billion. The bank provides Consumer and Wholesale Bankingproducts through its nationwide network of 65 branches in 22 cities, and welldeveloped alternative channels, including call centres, internet and 37 ATMs. Union Bank is listed on the Lahore, Karachi and Islamabad stock exchanges. Thebank has performed strongly, having grown assets from USD 988 million to USD2,081 million between 2002 and the first quarter of 2006. Union Bank has anextensive customer base with 400,000 retail and SME banking customers, and asmall but growing wholesale banking business. Based on audited local GAAP accounts as at 31 December 2005, Union Bank had • Total assets of USD 2,009 million • Total advances of USD 1,201 million • Net assets of USD 91 million For the 12 months ended 31 December 2005, Union Bank reported profit before taxof USD 47 million and profit after tax of USD 30 million. For the equivalentperiod in 2004, Union Bank reported profit before tax of USD 25 million andprofit after tax of USD 15 million. Acquisition Rationale and Benefits Union Bank has an impressive track record of growth driven by a strong localmanagement team. Standard Chartered will look to further grow Union Bank in waysthat will include: • In Consumer Banking: Standard Chartered will introduce its multi-product sales model across Union Bank's network to improve productivity. Standard Chartered will also add Wealth Management, Investments and segments such as Bancassurance and Priority Banking to complement Union Bank's existing Consumer Banking expertise. • In Wholesale Banking: Standard Chartered has a strong Wholesale Banking business in Pakistan and can add significant value through a programme of product introduction and penetration of new customer segments hitherto untapped by Union Bank. This will include expanding the product portfolio, for example Derivatives, Foreign Exchange, Transactional Banking, Trade Finance and Corporate Finance. The combined entity of Standard Chartered and Union Bank will deliver economiesof scale, a more complete product set, a stronger operating platform and a widerdistribution network. Approvals, Implementation and Timetable Before the Acquisition can be completed, SCBP is obliged, pursuant to Pakistanlaw, to make the Tender Offer. The Tender Offer is expected to commence on orabout 12 August 2006 and is expected to close on or about 1 September 2006. TheAcquisition is expected to complete shortly after the closing of the TenderOffer. Further announcements in relation to the Acquisition and the TenderOffer will be made as appropriate. Note to editors Standard Chartered - leading the way in Asia, Africa and the Middle East Standard Chartered PLC is listed on both the London Stock Exchange and the HongKong Stock Exchange and is consistently ranked in the top 25 among FTSE-100companies by market capitalisation. Standard Chartered has a history of over 150 years in banking and is in many ofthe world's fastest-growing markets with an extensive global network of over1,200 branches (including subsidiaries, associates and joint ventures) in over50 countries in the Asia Pacific Region, South Asia, the Middle East, Africa,the United Kingdom and the Americas. As one of the world's most international banks, Standard Chartered employsalmost 50,000 people, representing over 90 nationalities, worldwide. Thisdiversity lies at the heart of the Bank's values and supports the Bank's growthas the world increasingly becomes one market. With strong organic growth supported by strategic alliances and acquisitions anddriven by its strengths in the balance and diversity of its business, products,geography and people, Standard Chartered is well positioned in the emergingtrade corridors of Asia, Africa and the Middle East. Standard Chartered uniquely derives over 90 per cent of profits from Asia,Africa and the Middle East. Serving both Consumer and Wholesale Bankingcustomers worldwide, the Bank combines deep local knowledge with globalcapability to offer a wide range of innovative products and services as well asaward-winning solutions. Trusted across its network for its standard of governance and corporateresponsibility, Standard Chartered takes a long term view of the consequences ofits actions to ensure that the Bank builds a sustainable business through socialinclusion, environmental protection and good governance. Standard Chartered is also committed to all its stakeholders by living itsvalues in its approach towards managing its people, exceeding expectations ofits customers, making a difference in communities and working with regulators. For more information on Standard Chartered, please log on towww.standardchartered.com For further information, please contact: Romy Murray, Head of Investor Relations Tel: (44) 20 7280 7245 [email protected] Sean Farrell, Head of Media Relations Tel: (44) 20 7280 7163 [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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