Reuters/Hong Kong

Standard Chartered’s abrupt move to shut its global equities business last week could be a prelude to the lender selling off

stakes in a number of Asian banks as it looks to boost capital, people familiar with the lender’s thinking said.
The most likely potential sale is Standard Chartered’s $621mn holding in Agricultural Bank of China Ltd (AgBank), a person with

direct knowledge of the situation said.
The bank’s 45% stake in Indonesia’s PT Bank Permata, valued at around $638mn, could also be sold, though that deal would probably

come after an AgBank stake sale, people close to the bank said.
Early this month Standard Chartered moved aggressively to reverse its flagging fortunes by closing the bulk of its global

equities business and axing 4,000 jobs in retail banking. .
But Chief Executive Peter Sands is under pressure to cut costs and bolster capital levels further, as the bank grapples with

potential losses from commodities loans that could mean it needs $4.4bn in extra provisions.
“It was an easy decision to get rid of the equities business but there are other things the bank could be doing,” said a former

Standard Chartered executive.
The change in the banks fortunes reflects the fact its focus on emerging markets and commodities has flipped from being a

strength to a weakness in the current economic climate.
“The tailwinds that benefited Standard Chartered from 2008-2013 became headwinds in 2014,” Jefferies analysts said in a note this

week.
Having minority stakes in other banks has become less attractive to lenders like Standard Chartered as new rules mean they now

have to hold more capital against those holdings.
Bankers cautioned though that there is no active sale process for any of these assets.
A spokeswoman for Standard Chartered declined to comment. Sources were not authorised to speak publicly about the matter due to

client confidentiality.
The stake in Indonesia’s Bank Permata could attract interest from Asian banks, especially Japanese lenders, bankers who have

worked on similar deals told Reuters. Japanese banks have been aggressively expanding into Indonesia amid sluggish growth at

home.
Standard Chartered teamed up with Indonesian trading firm Astra International to buy a controlling stake in Permata in 2004. Any

sale could be complicated though by the agreement that binds Standard Chartered with Astra.
Standard Chartered also owns a 15.4% stake in Vietnam’s Asia Commercial Joint Stock Bank valued at about $105mn, while in China

it holds a 20% stake in unlisted China Bohai Bank for which it paid $123mn in 2005.
However any sale of stakes in Chinese banks are likely to be handled discreetly for fear of upsetting the authorities and giving

off the impression the bank is exiting the country.
That means Standard Chartered may choose to exit Bohai Bank by listing it on the stock market, the people familiar with the

bank’s thinking added.
Other divestment, aside from bank stakes, could also be on the cards.
Standard Chartered has already sold a bundle of investments made by its private equity arm worth about $530mn, a source with

direct knowledge of the matter said.
That deal was concluded at the end of last year, the source added, declining to be identified as the deal was not public.
Standard Chartered’s leasing unit Pembroke, which it bought in 2007 and which operates a fleet of 98 aircraft according to the

company website, could also be put up for sale. The bank’s aircraft and ship leasing portfolio was worth $4.9bn at the end of

2013, according to the bank’s annual report.
Selling more sizeable units such as the profitable aircraft leasing business would be painful for Standard Chartered, but may

ultimately prove necessary.