Standard Chartered to Consolidate Its Local Businesses

    Standard Chartered Bank has decided to transfer its corporate, institutional, private, and commercial banking operations to its Singapore subsidiary, along with retail and SME already transferred in 2013. It has reaffirmed its commitment to Singapore clients.

    BankBazaar Singapore – February 23, 2018

    Singapore: Standard Chartered (StanChart) Bank has decided to consolidate all its local business operations and merge them with Standard Chartered Bank (Singapore) Limited (SBCL), its local subsidiary. The bank has said that the process may take anywhere between 12 and 18 months to complete, subject to regulatory approvals and legal constraints.

    The UK-based global banking major had transferred its SME banking and retail banking operations to the newly formed subsidiary in 2013. With this latest move, the bank has also decided to transfer its corporate, institutional, private, and commercial banking operations to SCBSL.

    Will This Move Affect the Local Account Holders?

    StanChart has assured its Singapore clients that it will strive to make sure that its services and commitment to them won’t falter. It will also minimize effects on its local accounts and dealings, if any.

    Judy Hsu, CEO of Standard Chartered Bank for its Singapore and ASEAN market operations, has said that this new development shows the bank’s commitment to its customers in Singapore and shows the importance it attaches to its operations in Singapore.

    MAS has also welcomed the move and thinks that it proves StanChart’s commitment to the nation, where it has had a presence for over 150 years.

    What This Means for the Bank’s Credit Rating

    Although the call taken by the bank has the potential to create a new trend that may be followed by other foreign banks, it may affect the credit rating of its Singapore unit as indicated by Moody’s decision to review the move for a possible downgrade in ratings.

    Moody’s claims that consolidating all the banking businesses under the local subsidiary might expose SCBSL to higher credit risks as the ratio of non-performing assets will, in all likelihood, rise in 2019 and stay there.

    S&P has, however, maintained a stable outlook for the bank as it expects the parent bank to keep a large share of the non-performing loans out of the subsidiary and also inject fresh funds to give a boost to its business, suggests media reports. However, the quantum of infusion isn’t clear at the moment because the bank has not provided an estimate yet.

    The rating agency also thinks that the Singapore subsidiary will continue to build a healthy capital buffer through retained earnings for years.

    Time for Singapore Public Listing?

    While speculations are rife that this may pave the way for public listing of the bank in Singapore as it did in in Hong Kong, most analysts think otherwise.

    A spokesperson, on behalf of the bank, has turned down suggestions of moving domicile from the UK to Singapore.

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