UK banking giant Standard Chartered on Tuesday announced it will acquire US-based American Express Bank for about $860 million — a deal that will give it the much-needed additional branch licences in India. The acquisition would be an all-cash deal, StanChart said in a statement. It is likely to increase the bank’s network in India to a total of 90 branches.
Immediately after the announcement, industry sources said the development would have no impact on American Express’ credit card business, which it plans to pursue aggressively across the world including India. StanChart said the American Express Bank’s acquisition from American Express Company would be for a total cash consideration equal to the net asset value of AEB at completion plus $300 million in cash. As of June 30, this would have amounted to about $860 million, it said.
AEB, whose New York-based parent company AXP is the third-largest credit card network, is a leading international bank present in 47 countries, including India. Among other benefits, “the acquisition will include valuable branch licences in India and Taiwan subject to regulatory approvals,” StanChart said.
According to the data released by Reserve Bank of India, Standard Chartered is the largest foreign bank in India in terms of branches with a total of 81 branches, as against American Express Bank’s seven branches as of September 2006 out of total 258 branches of 29 foreign banks. Since then, Standard Chartered has got approval for two more branches in India, which the bank plans to open next month, a bank spokesperson said from Mumbai. Standard Chartered said it expects to further deepen its existing network and expand its access to new growth markets through this acquisition.
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