Analysts say the move appeared to be an example of Temasek jumping in at cheap prices seeking longer term returns.

Temasek, already the London-based bank's biggest shareholder with a 19 per cent stake, has agreed to act as underwriter for part of its £1.8 billion (S$4.1 billion) rights offering announced on Monday.

The move could see Temasek's stake in Stanchart rise to 22 per cent, if other shareholders decide not to take up their entitlements and Temasek takes over.

The Singapore investment company, also recently raised its stake in financial behemoths like US investment bank Merrill Lynch and Britain's Barclays this year.

That, despite the value of initial investments plummeting due to the current turmoil driven by a global credit crunch.

Analysts and economists The Straits Times spoke to said Temasek's latest move might be intended to mitigate losses from past investments that could have brought better returns.

'But that's the same, on the whole, for everybody,' said Mr David Cohen, an economist at Action Economics in Singapore.

'(But) there should be some bargains out there and Standard Chatered seems like a viable investment for the long term and with patience they can do well.'

The discounted 390 pence which Temasek has been offered to buy StanChart's shares, means the firm will buy shares of the third largest British bank for less than a fifth of its December peak.

Read the full story in Wednesday's edition of The Straits Times.