bank Standard Chartered has acquired the international banking operations of American
Express on Tuesday 18 September to boost its wealth management business. The acquisition
could finally end up costing it close to $1.1 billion (Rs4,447 crore). (See:
Standard Chartered to acquire American Express for $860 million)
London-based Standard Chartered said it would pay close to $860 million (Rs3,477
crore) for the wealth management and international dollar clearing operations
of American Express - known as AEB - with the option to buy its international
deposit arm in 2009 for an extra $212 million (Rs857 crore).
deal fast tracks the development of our private bank," Standard Chartered
chief executive Peter Sands said on Tuesday. AEB has a 10,000-strong private banking
customer base with approximately $22.5 billion (Rs9,097 crore) in assets under
Chartered launched private banking operations earlier this year, in Singapore,
Hong Kong, Beijing, Dubai and London. The bank expects to save $100 million (Rs404
crore) in costs following the acquisition. Job cuts and employee ''redeployments''
will likely account for part of the savings.
move may also see one of the world''s most famous credit card brands lose some
of its sheen as the bank focuses on its core operations. Standard Chartered is
unlikely to keep the American Express brand on board, say experts, though Sands
said the topic was "under review".
deal is a sign that American Express is no longer interested in operations outside
of the credit card business, a strategy it kicked off in 2005, when it spun-off
the American Express Financial Corporation as Ameriprise Financial.
American Express representative said that core operations were a prime focus,
encompassing the global payments business, the card issuing business and the merchant
processing business. American Express said the $1.1 billion transaction would
effectively have no real impact on earnings, but that it would free up capital
associated with those units.