Summary
American Express Company (AXP) announced on September 18, 2007, its agreement to sell its international banking subsidiary, American Express Bank Ltd. (AEB), to Standard Chartered PLC. This strategic divestiture includes AEB and American Express International Deposit Company (AEIDC) businesses, which will be reported as discontinued operations starting in the third quarter of 2007. The sale of AEIDC is expected to occur 18 months after the AEB sale. Investors should note that the financial figures provided for AEB and AEIDC, such as $21.3 billion in assets and $772 million in equity value as of June 30, 2007, will not be fully representative of the company's ultimate discontinued operations reporting due to certain intercompany allocations. The press release also details an after-tax charge of $50 million related to the sale's impact on the investment strategy for securities supporting the AEIDC certificate business, primarily due to market interest rate movements. Crucially, the core card and travel operations are not part of this sale, and Amex is actively securing new licenses or transferring operations where necessary.
Key Highlights
- 1Agreement to sell international banking subsidiary, American Express Bank Ltd. (AEB), to Standard Chartered PLC.
- 2AEB and AEIDC businesses will be classified as discontinued operations from Q3 2007 onwards.
- 3AEB had $21.3 billion in assets and $772 million in equity value as of June 30, 2007.
- 4AEB reported a net loss of $42 million for the six months ended June 30, 2007.
- 5A $50 million after-tax charge is recorded due to the sale's impact on the AEIDC investment strategy, driven by market interest rate movements.
- 6Core American Express card and travel businesses are not included in this sale.
- 7The company is actively managing licenses and operations for card and travel businesses in countries previously supported by AEB/AEIDC.