SINGAPORE sovereign wealth fund Temasek Holdings will retain its 18.8 per cent stake in Standard Chartered after subscribing to a rights issue, the bank said in a statement on Friday.

The British-based bank said Temasek now holds 356.6 million ordinary shares, compared with 268.2 million shares, equivalent to the same percentage it owned before the rights issue.

Temasek, the bank's largest shareholder, said only that it has 'subscribed to its pro-rata portion of Standard Chartered's rights issue'.

Standard Chartered announced last month that it would raise 1.78 billion pounds (S$3.91 billion) in a rights issue to better position itself during the global financial turmoil.

The bank, which is listed in Hong Kong and London, issued more than 470 million new ordinary shares under the issue.

With Temasek's stake below 20 per cent, Standard Chartered maintains its role as one of Hong Kong's three issuers of bank notes.

Mr Joseph Yam, chief executive of the Hong Kong Monetary Authority, said late last month that if a foreign government owns more than 20 per cent of a lender then it cannot continue to issue notes.

Standard Chartered said its rights issue 'reinforces the strength of the balance sheet during this turbulent period', adding that the move would allow it to take advantage of opportunities during the world's economic crisis.

Temasek and other sovereign wealth funds (SWFs) are government-created investment vehicles that have emerged as a potent force in global markets.

Temasek says it manages more than US$100 billion in investments.

It has stakes in major regional firms including Singapore Airlines as well as other financial institutions including former US investment bank Merrill Lynch, which suffered heavy losses from US subprime mortgage investments. -- AFP