For the Standard Chartered Bank's acquisition for Taiwan Hsinchu International Bank with $1.2 billion last week, JP Morgan said the deal could complement the bank's business in Asia-Pacific region, benefit to its development in middle-term, so the rating agency keep its Neutral rank and goal price of 197 yuan.

The price paid by Standard Chartered for the deal are about equal to 15.4 times of price/earnings ratio (P/E) expected 2007 and 2.3 times of book value. JP Morgan pointed out the investment's return ratio is 6.5%, while the Chartered's cost to issue the new shares is 9.7%, seeing from this perspective, the acquisition reduced the buyer's value.

However, the Chartered's overall profit contributed by Taiwan's business will increase from present 3% to 8% after the deal was over. JP Morgan said the payoff decreased by Synergy is limited due to the Chartered's relatively few business in Taiwan now. Standard Chartered said through the merging regional headquarters and logistics departments, they could cut $16 million (HK$125 million) payoff. While, the bank could strenthen Hsinchu Bank's enterprises loans and retailing banks business, JP Morgan predicted the bank could increase $14 million (HK$109 million) income after taxes untill 2008.