OCBC starts onshore private banking unit in Indonesia

Wealth management accounted for 32 per cent of OCBC's total revenue in the first quarter and was a major contributor to the 14 per cent increase in total net profit in the period.
Wealth management accounted for 32 per cent of OCBC's total revenue in the first quarter and was a major contributor to the 14 per cent increase in total net profit in the period.ST PHOTO: JAMIE KOH

New entity will serve Indonesians with investable assets of more than US$1m each

OCBC Bank has launched onshore private banking services in Indonesia, building up its wealth management footprint in the growth market.

OCBC NISP, its 85 per cent-owned Indonesia subsidiary, has received regulatory approval to establish a private banking unit there.

The new unit will serve Indonesians with investable assets of more than US$1 million (S$1.39 million) each, adding to OCBC's total private banking assets under management of around US$85 billion.

Having an onshore presence allows a financial institution to directly access domestic funds. This will be the key to unlocking Indonesia's high-net-worth segment, given that the country recently completed its tax amnesty programme.

The programme was launched by the Indonesian government last July to prompt the repatriation of offshore assets. About US$330 billion worth of assets were said to have been declared by Indonesian taxpayers as a result.

OCBC group chief executive Samuel Tsien expects the private banking unit to complement OCBC NISP's business and SME (small and medium-sized enterprise) banking foothold. He said: "It (OCBC NISP) is a strong SME banking player and its large corporates segment has likewise been growing steadily. Many of the business owners, whether they are of the SMEs or the larger companies, are our potential private banking clients."

Wealth management accounted for 32 per cent of OCBC's total revenue in the first quarter and was a major contributor to the 14 per cent increase in total net profit in the period.

Having an onshore presence allows a financial institution to directly access domestic funds. This will be the key to unlocking Indonesia's high-net-worth segment, given that the country recently completed its tax amnesty programme.

The bank reported a 70 per cent jump in wealth management fee income in the three months to March 31, while overall wealth management income rose 50 per cent to $724 million. This was partly because of the acquisition of Barclays' wealth and investment management business in Singapore and Hong Kong in November last year.

Indonesia has been a rewarding market for OCBC, even though the bank has not had a full-fledged private banking platform there.

OCBC NISP's pre-tax profit has had a five-year compound annual growth of 29 per cent.

A version of this article appeared in the print edition of The Straits Times on May 23, 2017, with the headline 'OCBC starts onshore private banking unit in Indonesia'. Print Edition | Subscribe