By Juliet Samuel And Max Colchester 

LONDON--A remote iron-ore mine in Sierra Leone helps explain Standard Chartered PLC's recent struggles.

Four years ago, the British bank agreed to lend $60 million to London Mining PLC, whose mine in central Sierra Leone is one of the company's main assets. The loan was part of Standard Chartered's efforts to increase its exposure to fast-growing, but risky, markets in Africa and Asia.

Last month, London Mining filed for bankruptcy, hit by tumbling prices for iron ore and the spread of Ebola, which inflated the company's costs and hurt production. The company's debt, which had ballooned to $225 million, had to be restructured, according to a person familiar with the matter, likely meaning that, at best, the loan won't be as profitable for Standard Chartered as the bank originally hoped.

The fate of the London Mining loan is emblematic of the problems recently afflicting Standard Chartered. After a decade of rapid expansion in risky markets, the bank's pile of troubled loans has grown quickly. Impaired loans in the third quarter nearly doubled from a year earlier. Standard Chartered's shares are down 38% over the past year and some investors are pushing to replace the bank's management, led by Chairman John Peace and Chief Executive Peter Sands.

A Standard Chartered spokesman declined to comment on specific customer loans but said the bank hadn't lowered standards or taken on riskier loans. In a recent presentation to investors, the bank said it had been "active and early in managing the risks in the hotspots of India, China and commodities" and that internal "stress tests" on its commodities loans have revealed "no additional vulnerabilities."

With roots tracing back to 1853, Standard Chartered has long touted its emerging-markets presence. It was this focus that helped the bank weather the financial crisis in far better shape than competitors. And while other Western banks cut their exposure to far-flung countries during the financial crisis, Standard Chartered grew. Since 2007, its total loans to customers have nearly doubled to $306 billion. Of that, 82% is in Africa or Asia. The bank has $61 billion of credit exposure to commodities.

The expansion fueled a decade of earnings growth until 2012, making Standard Chartered a darling of investors.

But a combination of increased competition from local banks and slowing growth in its core markets forced Standard Chartered to make riskier loans to sustain its fast expansion, said Chirantan Barua, an analyst at Sanford C. Bernstein. Its push into mining loans was especially aggressive, even as China's economy slowed, the commodity cycle turned and many of the world's top mining companies suffered multibillion-dollar losses.

Now Standard Chartered is paying the price. The bank said the 86% jump from a year earlier in third-quarter impairments to $539 million, which was larger than analysts expected, is partly due to "weak commodities markets." Over the same period, impairments at the Asian business of HSBC Holdings PLC, a competitor, increased 20%.

In addition to writing off more loans, Standard Chartered has revised the terms of other loans to help borrowers avoid defaulting. In 2012, the bank reported $2.5 billion of "renegotiated and forborne loans" to financially stressed customers, representing 0.9% of its total customer loans. In 2014, that category of renegotiated loans had risen to $7.1 billion, or 2.3% of its total.

After analyzing the accounts of 10,700 companies that operate in the same markets as Standard Chartered, analysts at Jefferies LLC concluded that about half of the companies are struggling to pay the interest on their loans and that rising interest rates could lead to "significant further deterioration."

The deterioration is already evident among Standard Chartered's commodities-industry borrowers, ranging from small outfits to giant multinationals.

Classic Diamonds India, a small Mumbai diamond trader, defaulted on a 120 million rupee ($1.9 million) loan from Standard Chartered, according to its auditor, Nikesh Jain, a partner at JMR Associates. Classic Diamonds couldn't be reached for comment.

The Singaporean unit of Varun Shipping Co., an Indian gas-transport company, missed $2.25 million in loan payments to Standard Chartered this year "due to liquidity constraints," according to Varun Chairman Yudhishthir Khatau, who says he plans to repay the debt by year-end. Standard Chartered sued the Varun unit in August.

PT Borneo Lumbung, a coal company controlled by Indonesian tycoon Samin Tan, borrowed $1 billion from Standard Chartered in 2012. This spring, Standard Chartered agreed to suspend cash interest and principal repayments and to extend the loan to 2019, according to Borneo Lumbung CEO Alex Ramlie. In lieu of a restructuring fee, the company offered to give Standard Chartered a 4% equity stake. (It isn't clear if the bank accepted that offer.)

Straits Resources Ltd., an Australian-listed mining company whose largest shareholder is Standard Chartered's private-equity arm, had borrowed money from Standard Chartered and agreed to repay the bank with copper, not cash. The $39 million loan had to be restructured last year to reduce the burden on Straits Resources.

In the case of the Sierra Leone iron-ore mine, Standard Chartered in 2010 lent $60 million to London Mining, which had just acquired a 25-year license to operate the huge mine, filings show.

The following year, the bank enlarged the loan to $90 million, with an interest rate of 5.5 percentage points above a benchmark rate. That loan was restructured twice in 2013, ultimately replaced by $200 million of new loans from Standard Chartered and other banks with interest rates at 8.5 percentage points above the benchmark.

In August, Standard Chartered and another bank lent London Mining an additional $25 million.

Two months later, London Mining filed for bankruptcy protection, citing "a lack of liquidity." Standard Chartered was the biggest creditor, according to a person familiar with London Mining. The Sierra Leone mine was sold, and the debt was transferred to the new owner.

During the third quarter, Standard Chartered shrank its loan book from the previous three months. The bank has had consistent annual loan growth dating back to at least 2000. Its chief financial officer, Andrew Halford, recently told analysts that Standard Chartered is now focusing on less-risky clients.

"Yes, it will take some money out for the moment," he said. "But hopefully we'll find opportunities to redeploy into better areas or more productive accounts."

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