Awhile ago, Temasek, the Singapore state-linked investment fund, grew concerned about the weak balance sheet and problem loans of Standard Chartered Bank. So it briefly considered merging it with DBS, a large local bank. Temasek decided against this plan because of regulatory and tax issues and concerns that the deal created conflicts of interest for the fund itself, because it is the largest shareholder in both lenders. Temasek executives also feared that rather than strengthening StanChart, a merger might cripple DBS.
Although DBS is based in Singapore and StanChart has its headquarters in the UK, it is the latter which is struggling because of its exposure to emerging markets. Once regarded as a proxy for the growth of Asian markets in commodity-rich nations like Indonesia, StanChart has today become a victim of the reversal of fortune suffered by many emerging markets and their heavily indebted corporate borrowers.