Mumbai: Standard Chartered Plc will buy American Express Bank, a wholly-owned subsidiary of American Express Company (AXP), for around $860 million in cash to boost its private banking and correspondent banking services.

The Asia-focused UK-based Standard Chartered Bank said the consideration was equal to the net asset value of American Express Bank, calculated at $860 million as of 30 June, plus $300 million.

American Express put the final purchase price at about $1.1 billion, a sum that includes an additional payment for the residuals of American Express''s Cayman Islands subsidiary.

The acquisition provides Standard Chartered with an opportunity to add capability, scale and momentum in two strategically important businesses. In the Financial Institutions segment, the acquisition will double the size of Standard Chartered''s dollar clearing business and provides a direct Euro and Yen clearing capability. American Express Bank will also fast-track the development of The Standard Chartered Private Bank.

"We are delighted to welcome the employees and customers of AEB into Standard Chartered," Standard Chartered''s group chief executive Peter Sands, said. "The acquisition will add capability and scale to two of the Group''s strategically important businesses. AEB''s balance sheet is highly liquid and its income is predominantly fee-based. This is a transaction, which has compelling strategic and financial logic and is management accretive."

Chairman and chief executive Officer of AEB, W. Richard Holmes said, "This transaction represents an exciting development for the customers and employees of AEB. Becoming part of a major global financial institution whose primary focus is on international banking will afford attractive expanded opportunities for our business."

The transaction will create significant cost and income synergy potential across business lines. Standard Chartered said, "As a result of the transaction, Standard Chartered''s Financial Institutions transaction banking business will be significantly enhanced by bringing both new client relationships and new capabilities to this key customer segment. Standard Chartered''s USD clearing business will double in size, reinforcing its position.

among the leading global USD clearers and ranking the Group sixth globally. In addition, AEB will provide Standard Chartered with a direct Euro and Yen clearing capability and excellent opportunities to cross-sell Standard Chartered''s broad product range.

Standard chartered will also gain access to a number of new growth markets such as Kazakhstan and Egypt where it currently has no presence.

As part of the transaction, Standard Chartered and AXP will include put and call options under which AXP can sell and Standard Chartered can buy American Express International Deposit Company (AEIDC) 18 months after the acquisition.

Standard Chartered expects the deal to add to its earnings in 2009, the first full year of ownership. Chief executive Peter Sands declined to specify how many of American Express Bank''s 2,300 employees would be made redundant, saying that some headcount was likely, but that Standard Chartered''s ongoing expansion plans will create "significant opportunities for redeployment."

He said American express, focused on financial institutions and high-net-worth customers, would boost the group''s transaction banking business and provide a steep change for its recently launched private bank, accelerating its private banking strategic growth plan by "about three years".

The acquisition is expected to be completed in the first quarter of 2008.

Standard Chartered said it is on the lookout for further acquisitions to find new growth platforms and has signed a string of smaller deals in recent weeks.