American Express agreed to sell its international banking subsidiary, American Express Bank, to U.K. bank Standard Chartered in a deal worth approximately $1.1 billion, the company said in a statement Tuesday.
Standard Chartered will pay American Express $300 million plus an amount equal to the net asset value of the American Express Bank businesses that are being sold at the closing date, the statement said. A Standard Chartered press release said this amounted to $860 million at the end of June.
Additionally, American Express expects another $212 million from dividends from a subsidiary of AEB and an additional payment when the subsidiary, American Express International Deposit Company (AEIDC), is transferred to Standard Chartered 18 months after the completion of the AEB sale.
However, a Standard Chartered spokesman said that the value of the subsidiary may be different. "We can't predict what the net asset value (for AEIDC) will be in 18 months," Tim Baxter, Head of External Communications at Standard Chartered, told CNBC.com.
The sale, which is expected to be completed in the first quarter of 2008, is subject to regulatory approvals and designed to help American Express focus on its core business.
"Today's agreement reflects our strategic focus on the high-growth, high-return payments businesses that have been driving our performance in recent years," American Express Chairman and CEO Kenneth I. Chenault said in a statement.
"The sale will not include any of the company's card or travel businesses, nor its international financial services businesses that operate separately from AEB," the statement said.
Standard Chartered said the aquisition bodes well for the bank's growth.
"AEB's balance sheet is highly liquid and its income is predominantly fee-based," Peter Sands, Group Chief Executive of Standard Chartered, said.