OCBC buying ING Asia private bank
By Clare Jim and Saeed Azhar
HONG KONG/SINGAPORE (Reuters) - Singapore's third-biggest bank OCBC announced its arrival as a serious wealth player after clinching a surprise deal to buy Dutch ING's private banking unit in Asia for $1.5 billion.
Oversea-Chinese Banking Corp (OCBC.SI) beat HSBC (HSBA.L) to the deal, which will triple the assets the Singapore bank manages for the rich and position it for opportunities in the fastest-growing private banking region of the world.
"What this would do is put the private bank on a firmer footing," Trevor Kalcic, banking analyst at RBS in Singapore, said of OCBC. "They had a very small private banking operation."
ING's (ING.AS) sale of its Asian private bank with about $16 billion in assets is its third major disposal in less than a month and the second in the Asia-Pacific region, as it seeks to raise capital to pay back bailout money to the Dutch government.
OCBC said in a statement on Thursday the acquisition will take its private bank assets to $23 billion.
"We are committed to investing more in the business and look forward to capturing greater market share of the growing number of high net-worth individuals in Asia and other markets," said OCBC CEO David Conner.
The purchase price, excluding ING's surplus capital of $550 million, is about 5.8 percent of ING's private banking assets in Asia, and would free up 370 million euros of capital for ING, the banks said.
By comparison, Julius Baer agreed to pay about 2.3 percent of ING's Swiss banking assets in a deal on October 7 excluding the surplus capital.
The CEO of HSBC's private bank Chris Meares told Reuters earlier this month that private banking assets in growth markets such as Asia could command a price of 2-3 percent of assets.
OCBC said the deal would cut its tier-1 capital by 1.5 percentage points to 13.9 percent.
Citigroup analyst Robert Kong said that OCBC's tier-1 capital exceeded the 12.5 percent for its local peers, giving it ample ammunition to seek M&A opportunities.
ASSET PRICES QUESTIONED
OCBC's private bank, which lost a third of its bankers to foreign rivals in 2006, is run by French national Olivier Denis. OCBC also controls insurance firm Great Eastern (GELA.SI) and asset manager Lion Global Investors.
ING's private bank in Asia is run by Renato de Guzman, who has been instrumental in building the business in his home country Philippines and Indonesia. For a newsmaker on the banker click on
The sale of the Asian assets came after it struck a deal to sell its Swiss private banking unit to Julius Baer (BAER1.VX) for 344 million euros on Oct 7. For stories on Dutch financial sector turmoil, click on
ING is in the midst of raising 6 billion euros to 8 billion euros through asset sales under a restructuring program it announced in April. It plans to ultimately exit 10 of the 48 countries where it does business.
The restructuring follows 10 billion euros in state aid ING received in October 2008 and a 22 billion euro asset guarantee it received from the Dutch state in January 2009.
The asset-sale program is seen as one potential way to offset a capital hit, though analysts have been unhappy with the sales thus far. In particular, they have found fault with both the prices paid and the fact that ING is selling assets in a still-depressed market. (Additional reporting by Ben Berkowitz in Amsterdam; Editing by Neil Chatterjee and Muralikumar Anantharaman)
© Thomson Reuters 2009 All rights reserved
Friday, October 16
OCBC buying ING Asia private bank
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Friday, October 16, 2009
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