From Breakingviews - First Abu Dhabi and StanChart may have second act
StanChart is also cheap. Even with a 30% equity premium FAB could snap up StanChart for $30 billion, or around 70% of expected tangible book value. That’s a 28% discount to other Asia-focused lenders, according to Breakingviews calculations. Not bad for a bank that Barclays analysts reckon could make a 10% return on tangible equity in 2024. FAB may think it can hack back StanChart’s costs, which are two-thirds of income.
The obvious stumbling block is capital. StanChart’s balance sheet is three times FAB’s $300 billion, and the UK bank’s $253 billion of risk-weighted assets dwarf the UAE bank’s $158 billion. Post-2008 globalpenalise banks for being bigger and more complicated, which means the combined group might have to hold extra capital to the tune of around 0.5% to 1% of risk-weighted assets. That’s potentially an increase of $2 billion to $4 billion, according to Breakingviews calculations.
Tahnoon may see this as too much bother. After all, he would have a job persuading Singapore wealth fund Temasek, which holds 16% of StanChart, to accept what would presumably be an all-share merger in which FAB would hold 62% of the combined entity. Temasek might also baulk at supporting a potential $4 billion rights issue to fill a capital hole. StanChart’s structure of national fiefdoms may complicate cost cuts, regulatory approvals and may even add to capital.
Malaysia Latest News, Malaysia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Negev Forum to meet in Abu Dhabi amid tensions in JerusalemSenior officials from the U.S., Israel, United Arab Emirates, Egypt, Bahrain and Morocco will convene in Abu Dhabi on Monday for a meeting of the Negev Forum to discuss regional integration.
Read more »
Bears have had the top draft pick twice before, in the 1940sThe Bears will pick first overall for the first time since 1947.
Read more »
Biden heads to the border for the first time as president | CNN PoliticsPresident Joe Biden is heading to the US-Mexico border on Sunday on the heels of major policy announcements and following relentless calls from Republicans who believe the trip is overdue.
Read more »
Biden on the border: President to get first-hand look at situation in Texas | amNewYorkPresident Joe Biden is heading to the U.S.-Mexico border on Sunday, his first trip there as president after two years of hounding by Republicans who have hammered him as soft on border security while the number of migrants crossing spirals.
Read more »
Robo-Lawyer: AI Legal Assistant to Help Defendant Fight Speeding Ticket in World FirstIn a world first, an AI system is set to help a defendant contest a parking ticket in a U.S. court of law next month. The company behind the 'RobotLawyer' program, DoNotPay, claims that the AI system will provide a more affordable option for legal representation in cases such as parking and speeding tickets.
Read more »
President Joe Biden visits US-Mexico border, getting first look at securityIt's his first trip to the border as president after two years of Republicans hounding him as soft on border security while the number of migrants crossing spirals.
Read more »