First Abu Dhabi Bank says it had considered offer for StanChart

DUBAI/LONDON: First Abu Dhabi Bank (FAB), the United Arab Emirates’ biggest lender, said on Thursday it had considered a bid for London-listed Standard Chartered but was no longer doing so.

Bloomberg had earlier reported that FAB had been exploring an offer for Standard Chartered as part of a plan aimed at building an emerging markets bank, driving StanChart shares up as much as 20%.

The shares pared the gains to trade up 7% at 1451 GMT following FAB’s statement that it was no longer pursuing a potential deal.

The Abu Dhabi lender said it had been in “the very early stages of evaluating a possible offer” for the emerging markets-focused bank.

Standard Chartered declined to comment on Thursday. “Given StanChart has traded at relatively undemanding multiples for some time, as well as the fact that it has the benefit of a material surplus capital position, it is not surprising that it is seen as a takeover target,” said John Cronin, analyst at Goodbody.

Practicalities such as regulatory complexities and possible opposition from US authorities to an important dollar clearing bank being taken over, mean any deal would be very hard to pull off in reality, Cronin said.

Furthermore, the mooted combination of FAB and StanChart would have been subjected to more onerous capital requirements that would burden the resulting lender, a banking source said.

Under United Kingdom and Hong Kong takeover rules, FAB cannot bid for StanChart within the next six months without the consent of the British bank’s board, or in the absence of a rival takeover.

StanChart, which operates in 59 markets worldwide and has around 85,000 staff, has struggled in recent years to increase its revenue after Chief Executive Bill Winters spent the early part of his tenure repairing its balance sheet and slashing thousands of jobs.

The bank in October said rising interest rates should boost its income, allowing it to increase its revenue targets despite the weakening global economy.