Standard Chartered considers outside capital for HK pensions unit

Standard Chartered is considering bringing in outside capital for its Hong Kong pensions business as the bank reviews its operations following a difficult year that included a change of chief executive.

The bank declined to comment on market rumours it would exit the business, thought to be worth about $350m, but an internal memo told staff "Hong Kong is a key market for Standard Chartered and MPF [the city's mandatory provident fund] will remain a core product offered to its clients."

It added: "Standard Chartered has supported the MPF programme since its inception and has built a significant market share."

Discussions are at an early stage, according to people familiar with the situation and a joint venture is possible. The business would likely be attractive to other operators in the highly concentrated market, where the top five - led by HSBC - hold about 75 per cent of the assets.

Last year Axa sold its MPF business to Principal Financial for $335m in one of the first examples of a potential shift by investment providers from chasing deals based on southeast Asian middle class growth to focusing on the needs of the region's rapidly ageing populations.

Hong Kong's MPF funds - the scheme opened in 2000 - have collectively grown at a compound rate of more than a fifth a year in the past decade.

Standard Chartered's deliberations come as the bank has been selling non-core businesses and seeking cost savings of up to $400m a year. In December it disposed of a Hong Kong consumer finance business for up to $700m and in January, shut its global equities unit and announced a further 2000 job cuts in its retail business.

Its South Korean consumer finance business was sold last year, too.

The bank in February announced that Bill Winters would replace Peter Sands as chief executive from June. Mr Sands had come under pressure from shareholders who worried the emerging markets-focused bank had lost its way.

In March it announced a 37 per cent fall in net profits to $2.5bn as costs and provisions for bad debts rose. Executive board members, led by Mr Sands, waived their bonuses in response.

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