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.

The volatile and depressed energy, metals and mining sectors accounted for a combined 29 per cent of StanChart’s corporate and commercial loan book in the first half of 2014. Real estate was responsible for another 8 per cent. StanChart has $61bn in commodity-related exposures, $38bn in loans outstanding in India and $83bn in loans to Chinese companies at a time when growth is slowing dramatically on the mainland. Moreover, much of the lending uses property as collateral, and property prices in China are under pressure or falling in most places.