Chinese banks keen to enter India

In what can be termed as an effort to enter Indian banking sector, three state-run Chinese banks are inviting Standard Chartered for majority stake.

StanChart is the largest foreign bank in India. But the British banking giant termed media reports to this effect as speculative.

However, the deal, if it goes through, has the potential to give the Chinese government a significant presence in the Indian banking space, where StanChart has the biggest branch network among overseas banks.

According to separate reports of private media houses, Industrial and Commercial Bank of China, Bank of China (BoC) and China Construction Bank (CCB) have evinced interest in purchasing 17 percent stake in the UK bank held by Singapore government's investment arm Temasek.

When asked for comments on the development, StanChart's External Communications Head Tim Baxter said, "This is speculation from an unnamed source and we do not comment on market rumours."

StanChart has 81 branches in India with licenses to open two more branches. Besides, it reached an agreement in September to acquire for $860 million US-based American Express Bank, which also has seven branches in India. Together, these 90 branches account for the bulk of total 258 branches of 29 foreign banks in India.

The media reports said that the three Chinese banks have touched base with Temasek, the largest shareholder in the British bank that acquired an 11.5 per cent stake in 2006 and later increased it to over 17 percent.

"StanChart could be put into play as a 25 billion pound (over $50 billion) takeover target after it emerged that China's three leading banks have been looking at buying a large stake in the UK-based emerging markets lender," a news report said.

"Temasek sources have admitted that Chinese banks have made approaches over the stake but the Singapore investment arm insists it is not looking to sell," it said.

The further said that StanChart "executives headed by Mervyn Davies, chairman, and Peter Sands, chief executive, are however thought to be opposed to Temasek selling its stake to another lender over fears that would compromise StanChart's independence."