Stanchart shares falters on Temasek sell-off move

Standard Chartered Bank shares fell the most in seven weeks yesterday after news that its largest shareholder, Singaporean wealth fund Temasek, is looking to divest its holding.

It said although there had been private discussions, no concrete deals had been reached.

The bank's shares fell 2.93 per cent, or HK$5.50, to HK$182, bucking the trend of the benchmark Hang Seng Index. This was the lender's largest decline since August 7, when news broke that it was being investigated over accusations that it helped Iran illegally funnel money through the US.

Temasek and Standard Chartered declined to comment yesterday.

"While a complete divestiture by Temasek is highly unlikely given the size of the position, it would make sense for it to sell part of its stake to rebalance the fund's portfolio as the position was acquired over six years ago," said Adam Chan, a senior analyst at CCB International.

Standard Chartered traded at 1.33 times its book value yesterday. This is much higher than its European peers, many of which trade on less than half of that.

Chad Kwok, portfolio manager at Guosen Securities (Hong Kong) Financial Holdings, said he did not think there would be a huge spill-over effect as the news would only have a short-term impact on its share price.

Temasek became Standard Chartered's largest shareholder after buying an 11.5 per cent stake from the family of late Singaporean tycoon Khoo Teck Puat.

Standard Chartered, which generates most of its revenue from Asia, Africa and the Middle East, faces several battles with US authorities over allegations that it dealt improperly with Iran. It still has to settle the matter with the US Treasury, the Federal Reserve, the Department of Justice and the Manhattan District Attorney.

Standard Chartered signed a consent order this week to pay a US$340 million fine to the New York State Department of Financial Services over the same case.

James Antos, a senior analyst at Mizuho Securities in Hong Kong, said a second fine could be imposed in a month or two.

Standard Chartered could be looking at as much as US$700 million in fines before the issue was concluded, he predicted.

Temasek has been busy trading bank shares in the past few months.

It bought 3.55 billion ICBC H shares from Goldman Sachs in April, lifting its interest in the bank to about 5.3 per cent of H shares, or 1.3 per cent of the total share base.

It sold its stake in Bank of China and China Construction Bank in May.