Temasek is willing to give Standard Chartered time to work on its turnaround before deciding on the fate of its underperforming US$4 billion ($5.6 billion) stake in the UK bank as part of a portfolio reshuffle, people familiar with the matter said.
Pressured by weak returns from low interest rates and a commodities rout, the Singapore state investor is taking a hard look at its US$190 billion portfolio and may exit unprofitable assets, these people told Reuters.
This approach was evident last week when Temasek sold at below book value a controlling stake in shipping firm Neptune Orient Lines (NOL) its biggest disposal since 2009.
Standard Chartered (StanChart), in which Temasek is the biggest shareholder with an 18% stake, has launched a painful restructuring under new CEO Bill Winters after being hit by bad loans in emerging markets and suffering a 70% tumble in its shares over the past two-and-a-half years.
“Temasek is giving them time. They've had a lot of engagement with the board, and Bill has sort of managed expectations in terms of turning this ship around,” said one of the people familiar with Temasek's thinking.
Temasek declined to comment.
It was not clear how long Temasek will wait to see the results of the restructuring.
By subscribing this month to its allotted portion of Standard Chartered's US$5 billion share sale, the Singapore investor has buttressed that position for now. But Temasek may become increasingly uncomfortable with the investment if shares in the bank do not recover.
Its paper loss on the Standard Chartered investment was US$1.2 billion, excluding dividends, just on the 12% stake it bought in 2006, according to calculations by Reuters. Temasek raised its stake to 18% in December 2007.
Since then Standard Chartered's shares have lost about two-thirds of their value.
“Clearly, Temasek wants to pro-actively manage its underperforming portfolio and get rid of stocks that are causing pain,” said one Hong Kong-based banker who works closely with Temasek, which is headed by Ho Ching, wife of the current prime minister of Singapore. “That means even the Standard Chartered stake could be on the block if a right solution comes around.”
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Pressured by weak returns from low interest rates and a commodities rout, the Singapore state investor is taking a hard look at its US$190 billion portfolio and may exit unprofitable assets, these people told Reuters.
This approach was evident last week when Temasek sold at below book value a controlling stake in shipping firm Neptune Orient Lines (NOL) its biggest disposal since 2009.
Standard Chartered (StanChart), in which Temasek is the biggest shareholder with an 18% stake, has launched a painful restructuring under new CEO Bill Winters after being hit by bad loans in emerging markets and suffering a 70% tumble in its shares over the past two-and-a-half years.
“Temasek is giving them time. They've had a lot of engagement with the board, and Bill has sort of managed expectations in terms of turning this ship around,” said one of the people familiar with Temasek's thinking.
Temasek declined to comment.
It was not clear how long Temasek will wait to see the results of the restructuring.
By subscribing this month to its allotted portion of Standard Chartered's US$5 billion share sale, the Singapore investor has buttressed that position for now. But Temasek may become increasingly uncomfortable with the investment if shares in the bank do not recover.
Its paper loss on the Standard Chartered investment was US$1.2 billion, excluding dividends, just on the 12% stake it bought in 2006, according to calculations by Reuters. Temasek raised its stake to 18% in December 2007.
Since then Standard Chartered's shares have lost about two-thirds of their value.
“Clearly, Temasek wants to pro-actively manage its underperforming portfolio and get rid of stocks that are causing pain,” said one Hong Kong-based banker who works closely with Temasek, which is headed by Ho Ching, wife of the current prime minister of Singapore. “That means even the Standard Chartered stake could be on the block if a right solution comes around.”
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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