Standard Chartered Bank PLC said Friday it had agreed to buy UBS' trade finance business for $215 million in cash.
The deal would bring London-based Standard Chartered $1.7 billion of assets, UBS' trade finance-related emerging market operations, and its U.S. dollar payments and clearing business.
The pact has clear advantages for both sides, said John Leonard, a banking analyst at Salomon Smith Barney in London.
Standard Chartered is a large-scale provider of trade finance, but Zurich-based UBS is not a big player in the business, Mr. Leonard said.
Trade finance products are not what UBS is trying to sell to its corporate customers, he added.
In September, UBS indicated that it was looking for a buyer for the business as part of a decision to focus on other operations.
The $695 billion-asset banking company is interested in expanding its private and institutional asset management and its capital markets activities through its Warburg Dillon Read subsidiary.
Standard Chartered, for its part, has become a major provider of trade- related processing services for U.S. and foreign banks that lack overseas networks.
"Financing trade in emerging markets is a core activity and long- established strength of Standard Chartered," said Rana Talwar, the bank's group chief executive.
The $76.5 billion-asset bank has long held a strong position in consumer and commercial banking in Asia.
According to sources close to the deal, the acquisition will also help bolster the bank's position in trade finance and cash management activities in Latin America.
Standard Chartered already provides many services to Latin American corporations and financial institutions, including correspondent banking and short-term trade and U.S. dollar payment services.
The deal is expected to give Standard Chartered an additional $85 million of annual revenues. Most of the assets to be acquired from UBS are short-term, trade-related loans.
In addition, Standard Chartered is to take on 280 UBS employees, 128 of whom work in New York, including those that handle Latin American commodities finance and structured finance.
Analysts said Standard Chartered is currently negotiating several other deals, most of them in Asia.
Standard Chartered was forced last year to set aside $723 million as provisions against problem credits in Asia after economic turmoil there.
The bank has made it clear that it plans to continue expanding in Latin America despite uncertainty about doing business in the region after the increasing financial difficulties of Brazil.
Sources at the bank said that, though short-term prospects in Latin America remain unclear, longer-term prospects are still good.
They also said Standard Chartered's risk in Latin America is limited since most of its lending in the region is extremely short-term.
