Standard Chartered may lose right to issue Hong Kong bank notes

Standard Chartered Plc may lose its right to issue Hong Kong bank notes if a Singapore-owned company raises its stake in the lender above 20 percent through a rights offer, Hong Kong’s de facto central bank said.

“We don’t wish a foreign government to have a large influence over our note-issuing banks,” Joseph Yam, chief executive of the Hong Kong Monetary Authority, told reporters in Beijing on Monday. His comments were broadcast on television.

Singapore’s Temasek Holdings Pte, the biggest shareholder in Standard Chartered, may raise its stake to as much as 22 percent from 19 percent as the company is acting as underwriter for part of the bank’s 1.8 billion pounds ($2.7 billion) rights offering. Lenders more than 20 percent owned by overseas governments are barred from issuing bank notes in Hong Kong.

This issue “is currently in the realm of hypothesis and in any case, it will need the necessary regulatory approvals,” Standard Chartered’s London-based spokesman Arijit De said by phone on Monday. Yam also said that the rights offer was unlikely to result in a foreign government owning more than 20 percent of the bank.

“We are aware of and respect HKMA’s regulations,” Temasek said in an e-mailed statement, without elaboration.

Standard Chartered, based in London, announced the offer on Monday to bolster its finances.

The lender, HSBC Holdings Plc and Bank of China Ltd. all issue notes in Hong Kong because the city, a semi-autonomous region of China, doesn’t have a central bank.

The Hong Kong dollar is also separate from the Chinese yuan.