Sept. 18 (Bloomberg) -- Standard Chartered Plc, the U.K. bank that derives most of its profit from Asia, agreed to buy the banking unit of American Express Co. for about $860 million to gain branch licenses in India and Taiwan and add wealthy clients.

Standard Chartered will pay cash equal to the net asset value of American Express Bank Ltd. plus $300 million, the London-based bank said in a statement today. The acquisition will double Standard Chartered's U.S. dollar-clearing business, it said.

Chief Executive Officer Peter Sands has said he aims to double private-banking centers in the next four years and has spent more than $5 billion on takeovers in Asia since 2005. American Express Bank, founded in 1919, has private-banking units across five continents with about 20 marketing offices, 10,000 customers and $22.5 billion of assets under management.

``It looks like a good deal'' for Standard Chartered, said Mike Trippitt, a London-based analyst at Oriel Securities Ltd. ``They should be able to grow the business quite nicely and it will help lift the private-banking side.''

Standard Chartered shares rose 4.2 percent to 1,530 pence in London, valuing the company at 21.5 billion pounds ($42.9 billion). American Express rose 4.5 percent to $60.80 as of 4 p.m. in New York Stock Exchange composite trading.

American Express, the third-largest credit-card network, has raised more than $1.5 billion in three years by selling assets such as the tax-and-business-services division. American Express said it will get extra payments worth about $212 million over the next 18 months as it sells a separate unit to Standard Chartered.

`Double-Digit' Return

Standard Chartered said it expects to generate a ``double- digit'' return on investment on the acquisition in 2009, excluding integration costs. Pretax cost savings from combining information technology and administration will amount to ``well in excess'' of $100 million a year from 2009, it said.

American Express's banking arm provides about 1,700 banks in 120 countries with clearing services in U.S. dollars, euros and Japanese yen. The bank's after-tax profit in the first six months was $30 million, after a $31 million profit for all of 2006.

``The acquisition significantly enhances the wholesale bank and turbo-charges growth of the newly launched private bank,'' Sands said in a conference call with reporters today. About 60 percent of American Express Bank's assets come from regions where Standard Chartered is already present, such as Hong Kong and Indonesia, the bank said in a presentation on its Web site.

India, Taiwan

Purchasing the unit will also take Standard Chartered's private bank into new markets in Kazakhstan and Egypt, Sands said. The acquisition will add seven licenses to the 81 it has in India and two licenses to the 86 it has in Taiwan.

The lender restarted private-banking operations last year, a decade after selling out to Swiss Bank Corp. The unit manages wealth for customers with $1 million to $50 million in assets. The company has announced plans to open private-banking centers in Singapore, Hong Kong, Dubai, Mumbai, London, Jersey, Beijing, Seoul, New Delhi and Shanghai this year.

In addition to $100 million a year in cost savings, Standard Chartered will generate ``significant revenue synergies,'' Sands said. ``We have ripped up our original targets'' for private- banking profit growth, he said, without giving details.

Today's acquisition is Standard Chartered's biggest since the purchase of Taiwan's Hsinchu International Bank for $1.2 billion a year ago. It makes more than 90 percent of profits from Asia, Africa and the Middle East.

Chenault's Strategy

American Express Chief Executive Officer Kenneth Chenault's strategy has been to strip away businesses unrelated to credit cards to compete more effectively against his bigger rivals, MasterCard Inc. and Visa International Inc. The company spun off its brokerage business, now known as Ameriprise Financial Inc., in 2005 and sold a tax-services unit a month later.

``Since the rise of the card products over the travel and banking services, the role of the bank, which only served non- U.S. customers, was not clear,'' Robert Ellis, a New York-based analyst at Celent LLC, said in a note. ``American Express will be a stronger company as it focuses on its card products.''

American Express's banking unit agreed to pay $65 million in August to settle a money-laundering case with the U.S. Department of Justice, the Federal Reserve and the Financial Crimes Enforcement Network, the company said in a regulatory filing last month. About $5 million of the payment was related to violations of suspicious-transaction reporting requirements.

To contact the reporters on this story: Ben Livesey in London at blivesey@bloomberg.net; Elena Logutenkova in Frankfurt at elogutenkova@bloomberg.net.

Last Updated: September 18, 2007 16:25 EDT