Deal is more significant than it seems

ON the face of it, Standard Chartered’s acquisition of General Electric’s (GE) car financing arm is pretty unremarkable. It will pick up $1.8bn of loans through the deal (worth around $780m), representing just 2.4 per cent of its total Singaporean assets.

However, the importance of Singapore to Standard Chartered’s ambitions should not be underestimated. It might be a smallish market, accounting for 14 per cent of 2009 profits compared to 21 per cent each for Hong Kong and India, but it is growing quickly: operating income was up 21 per cent in 2009, against five per cent for Hong Kong and seven per cent for India. Last week it announced it was hiring an extra 2,000 staff in the region.

The deal could also herald a flurry of similar acquisitions. When the bank raised £3bn through a rights issue in October last year, it insisted it was not about to hit the buyout trail (instead arguing it was boosting already healthy capital buffers well in advance of new Basel III rules).

But we still think Standard Chartered raised the cash to help fund a series of strategic bolt ons, at least in part. Rumours of a JP Morgan bid for the bank have subsided in recent months, but Peter Sands could help stave off an approach by fattening up. Watch out for a series of similarly “unremarkable” bolt-ons in the months ahead: taken together, they could be far more significant.