Will there be more mergers in the region?
By SHABBIR H. KAZMI
May 01 - 07, 2000
Standard Chartered Bank and ANZ Grindlays Bank have signed an agreement
whereby Standard Chartered will acquire the Grindlays business in the Middle East and
South Asia and ANZ Grindlays' international private banking business. The total
consideration is approximately of US$ 1.34 billion. The combined business will have around
9,000 employees and 116 branches in 17 countries in the region, with over 2.2 million
customers. The deal will make the combined business the No.1 in the region and a strong
No.2 in most of the countries in which it operates.
Zahid Rahim, Chief Executive, Pakistan, Standard Chartered Bank said,
" This is a landmark transaction in the local banking industry and creates a premier
international bank with substantially enhanced market share. We are extremely optimistic
about our prospects here as we combine the strengths of our network, product and service
competencies to create a client focused powerhouse. This is an ideal time to increase our
investments in Pakistan and we are bullish about the country's future. We look forward to
working closely with government, regulators, customers and our people to complete the
integration process in a smooth and efficient manner."
Rana Talwar, Group Chief Executive, Standard Chartered PLC termed this
acquisition completely in line with stated strategy and a significant step towards
objective of becoming the world's leading emerging markets bank. The deal also emphasizes
bank's commitment to develop its business in the Middle East and South Asia.
The acquisition of Grindlays will create the premier international
banking business in the Middle East and South Asia. The deal combines two strong and
complementary consumer banking franchises to build the leading consumer bank in the region
and strengthen the corporate banking franchise through greater focus on multinational and
large local companies.
Good economic growth rates are forecast for India and across the region
and many believe that this is the right time to invest. This is an excellent opportunity
to acquire a well-managed, quality business at the right price. This positions the new
entity to take advantage as the region, with its rapidly growing middle class, opens up to
commerce and new banking products.
The move follows the recent acquisitions of the UBS international trade
finance business and another bank in Thailand, both of which have been successfully
integrated into Standard Chartered. The Bank plans to pursue opportunities to develop its
The increase opportunities for the continuing development of Internet
banking products in markets that offer enormous potential add to the strength of Standard
Chartered's management resources to achieve significant synergy through operating
efficiencies and revenue enhancements.
ANZ Chief Executive Officer said, "The transaction is attractive
for both organizations. The move is good for shareholders, customers and staff of both
banks. The transaction generates immediate value for our shareholders. For Standard
Chartered, it creates the leading international bank in the Middle East and South Asia and
it will benefit from the growth and synergy the integrated platform will bring."
Standard Chartered has 57 branches in nine countries in the region.
Operating profit before provisions of US$ 130 million was generated for the year ending
December 31, 1999. Grindlays has extensive coverage across the region where it offers a
wide range of banking services to nearly one million customers through 116 branches in 13
countries. It focuses on providing trade finance and cash management to major local and
multinational companies. For the year ending September 30, 1999, Grindlays, together with
the private banking business being acquired, posted after tax profit of US$ 89 million.
Standard Chartered Plc expects to complete the integration of ANZ
Banking Group's Grindlays business in the third quarter, subject to regulatory approvals.
While no decisions have as yet been taken on the new branding or on consolidating the
combined operations, these would also be completed within this time frame,
Bankers and analysts view Standard Chartered's acquisition of ANZ
Group's Grindlays business in the Middle East and South Asia as positive, while putting
pressure on local banks to consider mergers. It is a good move, with the merged entity
being in a better position to offer more competitive products and services, thus helping
improve standards throughout the banking sector. It is also an indication that this region
too is heading towards mergers.
It is a positive move and sets the course for more consolidations and
acquisitions. Other banks should also consider mergers, where appropriate. The merged
entity, is in a position to threaten both the local and foreign commercial banks for
leadership position thus putting pressure on all of them.