StanChart in talks to spin off $5bn PE unit

Standard Chartered is in talks about spinning off its $5bn private equity arm to its employees, following the path already taken by most big banks under pressure from regulators.

A spin-off of the division, which is run by Joseph Stevens, would create one of the larger emerging market focused private equity investors with operations across Asia, the Middle East and Africa. It manages more than $2bn for the bank and $3bn for third-party investors, reports Martin Arnold in London.

The unit has increasingly become a drag on the bank’s performance, hit by the recent volatility in many of its main markets. The principal finance unit, which includes the private equity business, made $167m of losses in the first half of the year.

Since becoming StanChart’s chief executive last year, Bill Winters has launched a clean-up of its balance sheet, seeking to sell or restructure about $100bn of assets.

Earlier this year he moved to stamp out a “cancer” of complacency and lax controls that he blamed for recent misconduct among senior staff at the emerging markets bank, including cases of executives making inappropriate investments. The planned spin-off of the private equity unit was first reported by Bloomberg.

The bank said in a statement: “We have been clear in strategic announcement in November that the Group is looking at non-core businesses, or those that do not sit within our tightened risk tolerance. We are not commenting on any specific businesses beyond those we have already disclosed.”