Shares of Standard Chartered (2888) jumped as much as 12 percent in London yesterday on a report that First Abu Dhabi Bank is pressing ahead with a potential offer of up to US$35 billion (HK$273 billion) for the lender.
Officials at the Abu Dhabi bank are working under the radar on a possible bid once a cooling-off period required by UK takeover rules elapses, sources said.
FAB, as the bank is known, recently completed due diligence on the London-based lender, they said, adding that any deal would be dependent on market conditions and the performance of Standard Chartered's share price.
FAB,which is worth about twice as much as Standard Chartered, is exploring an all-cash bid in the range of US$30 billion to US$35 billion, the people said.
Any acquisition would be funded by its backers, which include Abu Dhabi sovereign fund Mubadala Investment and the emirate's ruling Al Nahyan family, they said.
FAB's chairman Sheikh Tahnoon bin Zayed Al Nahyan is a powerful royal and has in recent years taken on a more prominent role to spearhead the emirate's political and economic goals.
Regulatory approvals and compliance are seen as the biggest obstacles to a successful acquisition, the people said. FAB would need approval from the US Treasury to run Standard Chartered's dollar clearing license, for example, one of them said.
Under one scenario being considered, Standard Chartered could be delisted from exchanges in Hong Kong and London and the merged bank's headquarters could be shifted to Abu Dhabi from the UK capital, the people said. Such a move is likely to face strong opposition in Standard Chartered's home market, they said.
FAB last month said it had explored a bid for Standard Chartered, but that it was no longer considering an offer.
The British bank's relatively small market value - about US$24 billion compared with FAB's US$43 billion - and the lure of a business with exposure to some of the world's fastest-growing economies make it a strong proposition for the Abu Dhabi lender.
The drop in the British pound also adds to the attractiveness of the bank that trades at just 0.56 times its book value.
As well as continuing to pursue either a majority stake or minority holding in Standard Chartered, FAB is also looking at acquiring specific assets from the British lender or forming a joint venture to help it expand internationally, some of the people said. FAB is also looking at other banks, including one in Asia, and investment bankers are also pitching a number of possible targets to FAB, other people said.
Standard Chartered's shares in Hong Kong closed at 0.85 percent higher before the news.
The bank’s shares jumped 12 percent in London. REUTERS
