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StanChart buys AmEx Bank

London, Sept. 18 (Agencies): Standard Chartered will buy American Express Bank for $860 million to boost its private and correspondent banking services.

StanChart said the acquisition would be for a cash consideration equal to the net asset value of the American Express Bank at completion plus $300 million. As of June 30, this would have amounted to about $860 million, it said. American Express, however, said separately it valued the transaction at $1.1 billion.

The deal, which Standard Chartered will finance through internal resources and an ongoing debt funding programme, is expected to create pre-tax cost savings of more than $100 million per year from 2009 onwards.

The bank expects the deal to be accretive to earnings per share in 2009, the first full year of ownership.

Standard Chartered said American Express Bank, which focused on financial institutions and high net worth customers, would boost the group's transaction banking business and provide a change for its recently launched private bank, accelerating its private banking strategic growth plan by “about three years”.

The acquisition is expected to be completed in the first quarter of 2008.

StanChart said it was on the lookout for acquisitions to find new growth platforms and had signed a string of smaller deals in recent weeks.

Shares of Standard Chartered lost some gains on the initial announcement of the deal, but were up 2.6 per cent at midday, lifted along with the rest of the sector, at 1,507 pence.

American Express Bank’s global correspondent banking business caters to 1,700 banks in over 120 countries and its private bank offers services to over 10,000 customers with total assets under management of around $22.5 billion as on December 31, 2006.

“The acquisition will add capability and scale to two of the group’s strategically important businesses. AEB’s balance sheet is highly liquid and its income is predominantly fee-based. This is a transaction which has compelling strategic and financial logic and is management accretive,” said StanChart group chief executive Peter Sands.

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