StanChart to buy AmEx Bank for $860 million
UK-based international banking giant Standard Chartered Plc. has announced that it has reached an agreement to acquire US-based American Express Bank (AEB) for about $860 million in an all-cash deal that would give the British banking major seven additional branch licences in India.
Standard Chartered said the consideration was equal to the net asset value (NAV) of American Express Bank at completion plus $300 million, and calculated the NAV as of June 30, at $860 million.
It said the initial sum represents 14.3 times AEB's annualized 2007 first-half pretax profit and 1.5 times its net asset value.
American Express has put the final purchase price at about $1.1 billion, a sum that includes an additional payment for the residuals of American Express' Cayman Islands subsidiary - American Express International Deposit Co. - after its assets are wound down over the next 18 months and its customers migrated to Standard Chartered.
AEB, whose New York-based parent company is the third-largest credit card network, is a leading international bank present in 47 countries, including India.
AEB's global correspondent banking business caters to approximately 1,700 banks in over 120 countries and its private bank services over 10,000 customers with total assets under management of around $22.5 billion as on December 31, 2006.
The deal, however, will have no impact on American Express' formidable presence in the credit card and travel business.
"The sale of AEB will not include any of American Express' card or travel businesses internationally, nor international financial services businesses that operate separately from AEB," American Express said in a press release.
"In areas where certain travel-related operations are conducted through AEB or a subsidiary of AEB, American Express is in the process of acquiring new licenses and/or transferring the business to a different American Express Company entity to ensure a smooth transition. These countries include Argentina, Austria and India," a spokesperson of American Express said.
"The sale does not include any of our payments, including card and travel-related businesses in India, which are our primary businesses," the spokesperson said in a statement.
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