OCBC to buy National Australia Bank's private wealth business in Singapore and Hong Kong

The business serves a total of about 11,000 customers across the two markets.
The business serves a total of about 11,000 customers across the two markets.PHOTO: REUTERS

SINGAPORE - OCBC Bank has agreed to acquire National Australia Bank's (NAB) private wealth business in Singapore and Hong Kong, it announced on Thursday (May 11).

As at the end of February, the business comprised a mortgage portfolio amounting to about US$1.7 billion (S$2.39 billion) worth of mainly residential mortgage loans, and a deposit portfolio made up of about US$3.05 billion (S$4.28 billion) worth of deposits of a mix of currencies.

The purchase consideration is the book value, or net asset value, of the business at the time of completion of the transaction.

The transaction is expected to be completed before the end of the year subject to regulatory approval. The business will be earnings accretive to OCBC Bank within the first year of completion.

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When the deal is completed, OCBC Bank will gain access to about 11,000 new customers primarily from the affluent segment - more than 7,000 in Singapore and about 4,000 in Hong Kong.

The majority of the customers are Singapore and Hong Kong residents.

The addition of S$2.39 billion of mortgage loans to OCBC's mortgage portfolio will also raise its overall size by about 4 per cent, based on its mortgage loans book of S$60 billion as at March 31.

OCBC said that the mortgage portfolio it is acquiring is well-supported by a broad pool of mainly residential properties with a weighted average loan-to-valuation ratio of below 60 per cent.

Mr Ching Wei Hong, chief operating officer of OCBC Bank, said: "This deal makes financial and strategic sense to us. A mortgage loans book of more than S$2 billion is not small. It would have taken us time and money to grow our mortgage loans organically by that amount. We are now getting an immediate boost to our mortgage loans book."

Mr Neil Parekh, National Australia Bank's general manager for Asia (ex-Greater China), said: "We wanted a buyer that could meet our customers' growing demand for a wide range of wealth management solutions in Asia.

"OCBC is uniquely qualified to do so. We will work closely with OCBC Bank during the transition to completion to ensure a smooth process for customers moving to a business with a comprehensive product offering and strong presence in Asia."