Temasek ramps up pressure over Standard Chartered turnround: FT

Temasek ramps up pressure over Standard Chartered turnround: FT

By: 
The Edge Singapore
21/01/19, 03:54 pm

SINGAPORE (Jan 21): Standard Chartered’s largest investor Temasek has grown frustrated with the slow pace of chief executive Bill Winters’ turnround, according to a report by The Financial Times of UK, and is stepping up pressure on the UK-listed bank ahead of his pivotal strategy update in February.

The Singapore state investment company, which owns about 16% of StanChart, was reported by FT to be asking for more frequent and detailed briefings from top executives and even floated the prospect of taking a board seat in a meeting last year, two people with knowledge of the discussion told the daily.

That would be an unusual step for the US$300 billion ($408 billion) group, which rarely takes non-executive positions or gets involved in the day-to-day operations of its portfolio companies, indicating the level of their concern, the people said.

Login to read: Temasek performs active rebalancing of its portfolio

See: How CapitaLand's latest acquisition could implicate our nation's coffers

See also: Temasek said to explore options for stake in A.S. Watson

Since Winters took over in June 2015, the bank’s share price has fallen almost 40% — deeply underperforming most rivals — and trades at about GBP 6 ($10.50) today compared with a price of GBP 15.24 when Temasek first bought in during 2006. That leaves the Singapore fund sitting on billions of pounds in paper losses.

FT says the bank, which is focused on Asia, the Middle East and Africa, is going through a difficult cycle and that is why the intensity of engagement has increased, said a source close to the investor. Temasek “are more patient than most, but it is not never-ending . . . There needs to be more evidence of a turnround soon.”

Temasek had asked the bank’s executives why, even after three years of restructuring, they are unable to generate close to the double-digit return on equity (ROE) enjoyed by Asian rivals such as Singapore’s DBS Group, another of its major investments with a 29% stake.

“StanChart’s profitability is about half its regional peers; an ROE of about 6% makes no sense for an Asian and emerging markets bank,” said Ronit Ghose, global head of banks research at Citigroup. “Long-suffering shareholders naturally expect much higher returns and the strategy update is a chance to give them greater visibility on the upsides from cost and capital optimisation.”

Fears of a Chinese economic slowdown and the trade war between the US and China have weighed on the bank. Greater China, and specifically Hong Kong, is the lender’s most important region where it makes 40% of its revenue at the best profit margins. Reflecting this and other issues, the bank currently trades at less than half the book value of its assets.

The Singapore fund previously offered to play a bigger role in the bank’s affairs and appoint a non-executive representative when it first bought in, but was rebuffed by the former management team led by Peter Sands, a separate person involved in those discussions said.

2019 GDP growth to ease to 'slightly above midpoint' of 1.3-3.5% forecast: MAS

SINGAPORE (Apr 26): MAS expects GDP growth to come in slightly above the mid-point of 1.3-3.5% forecast range in 2019, as growth momentum of the global economy has moderated at the turn of the year amid sluggish trade. This was according to the Guide to the Macroeconomic Review April 2019, released by the Monetary Authority of Singapore’s (MAS) Economic Policy Group on Friday morning. On the back of easing GDP growth, MAS has decided to maintain the current rate of appreciation of the SGD NEER policy band. This policy stance is consistent with a modest and gradual appreciation path of ....
Read More >>

CapitaLand Mall Trust kept at 'hold' by OCBC and Maybank on higher mall supply, soft retail sector

SINGAPORE (Apr 26): OCBC Investment Research says CapitaLand Mall Trust’s (CMT) 1Q19 results met its expectations. Gross revenue rose 10.0% y-o-y to $192.7 million while NPI jumped 11.5% to $140.1 million, forming 25.1% of its FY19 forecast. See: CapitaLand Mall Trust declares 3.6% higher DPU of 2.88 cents on higher income OCBC says Funan has already achieved high pre-commitment levels of 90%, and is on track to open in the middle of 2019 and will thus contribute to CMT’s earnings progressively from 2H19. However, the near-term outlook remains cautious given the higher supply, ....
Read More >>

Singapore's GLP plans US$3 billion IPO for its US warehouses

(Apr 26): Singapore-based GLP is planning an initial public offering (IPO) for its US operations that could raise about US$3 billion ($4.09 billion). GLP may seek to value the operations at more than US$20 billion, and the firm is said to have confidentially filed with securities regulators for the planned offering. Much of GLP’s US business stems from a 2014 deal to acquire IndCor Properties from Blackstone Group for US$8.1 billion. The offering could help GLP recoup funds after it was taken private by a management-backed consortium from the Singapore stock exchange last year. GLP ....
Read More >>