In its latest overseas foray, the state-linked investment firm will purchase 152.4 million shares worth an estimated US$4 billion from the estate of Khoo Teck Puat, a reclusive Singaporean billionaire who died in 2004.

The deal is subject to regulatory approval but the bank issued a brief statement welcoming Temasek as a "long-term investor."

"It's very much in line with their strategy," Bob Broadfoot, managing director of Hong Kong-based Political and Economic Risk Consultancy, said of Temasek's new investment.

He said Temasek had been placing heavy emphasis on the financial sector and its entry into the bank, an emerging markets specialist with a strong Asian focus, gives it "potential access to a pool of really top-flight managers".

Gan Chee Yen, senior managing director for investments at Temasek, said Standard Chartered was well-positioned to benefit from Asia's economic growth and the acquisition would help Temasek achieve a "balanced portfolio".

Asked whether Temasek was planning to raise its stake and how active it will be in the bank's management, a Temasek spokeswoman said: "It is not appropriate for us to comment" because the sale had yet to be formally approved by regulators in various jurisdictions.

Temasek, which already holds 0.07 percent in the bank, insists it does not interfere in the day-to-day operations of the companies in its global portfolio, worth over 63 billion dollars before the Standard Chartered deal.

In London, Standard Chartered shares fell back in early trade as Temasek's acquisition dashed hopes of a takeover bid by major global players like JP Morgan Chase and Barclays. The stock had ended at 15.24 pounds on Monday before the sale was announced.

Earlier this month, Standard Chartered announced a 19-percent rise in 2005 earnings, owing partly to the acquisition of South Korea's First Bank, to $2.68 billion.

Temasek's glittering company stable includes Singapore Airlines, Singapore Telecommunications, port operator PSA International, DBS bank and developer CapitaLand. Temasek also has stakes in foreign banks from China to Indonesia.

Khoo, an old-school banker and hotelier, was Standard Chartered's single largest shareholder when he died in February 2004 at the age of 87, sparking speculation it could become a takeover target for one of the global giants.

That year, US business magazine Forbes declared Khoo the richest person in Singapore -- and the 108th wealthiest in the world -- with a net worth of $4.3 billion.

Temasek is run by Ho Ching, the wife of Singapore's Prime Minister Lee Hsien Loong.

Last year, she was ranked 30th in Forbes' list of the 100 most powerful women in the world, thanks to her management control of the Temasek portfolio.

Temasek's expansion drive has caused unease in some markets, notably in Thailand, where it is been dragged into a political crisis over its dealings with the family of Prime Minister Thaksin Shinawatra.

It is under fire from the Thai opposition after a Temasek-led consortium gained control of telecommunications giant Shin Corp by buying a block of shares from relatives of Thaksin for $1.9 billion.

Thaksin denies any wrongdoing by his family in the tax-free sale and has dismissed opposition demands to resign, instead calling snap elections for this weekend.

The Singapore government maintains that all investments by Temasek are done on a purely commercial basis.

Elizabeth Khoo, a trustee of the estate and daughter of the late Singaporean tycoon, said in a press statement: "My late father would be happy as he had wanted the block to be sold to a proven long-term investor and had a high regard for Temasek."

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