OCBC Bank's private banking unit will acquire the wealth and investment management business that Britain's Barclays Bank has in Singapore and Hong Kong.
The US$320 million (S$430.8 million) deal will add more than 1,800 clients to Bank of Singapore in two of OCBC's core markets, Singapore and Greater China.
"Barclays' wealth and investment management (business in) Singapore and Hong Kong has strong coverage of ultra-high-net-worth clients and entrepreneurs," said OCBC in a statement yesterday.
"The acquisition further positions Bank of Singapore to capture opportunities in the two strategic private banking hubs in Asia, Singapore and Hong Kong."
The US$320 million indicative purchase price was set at 1.75 per cent of the assets under management of Barclays' wealth and investment management businesses in the two cities. The final amount will be confirmed once those assets are transferred to Bank of Singapore on completion of the deal.
Barclays' wealth and investment management businesses in Singapore and Hong Kong had assets under management of US$18.3 billion, as of Dec 31 last year.
With the banking sector's loan growth expected to stay low and net interest margins to remain flattish in the near term, we believe growing the wealth management business will be increasingly important for Singapore banks as they tap the rapidly growing space in the region.
MR HE YUXUAN, a KGI Fraser Securities analyst.
OCBC noted that there is little overlap in client relationships between Bank of Singapore and the Barclays businesses in Singapore and Hong Kong.
The deal will also add 88 relationship managers, who have worked in the Barclays operations for an average of more than five years, to Bank of Singapore, bringing its total to about 400.
A league table ranking Asia's top 20 private banks had Bank of Singapore at 11th, with US$55 billion of assets under management - a 7.8 per cent jump from 2014. The table was released by the Asian Private Banker trade magazine on Wednesday.
KGI Fraser Securities analyst He Yuxuan said the acquisition will lift Bank of Singapore four places to seventh spot, just behind DBS Bank, which came in sixth with assets under management of US$75 billion.
He added: "With the banking sector's loan growth expected to stay low and net interest margins to remain flattish in the near term, we believe growing the wealth management business will be increasingly important for Singapore banks as they tap the rapidly growing space in the region."
OCBC's consolidated wealth management income across its group of firms rose 6 per cent to $2.35 billion last year. It comprises 27 per cent of the OCBC group's total income. Its wealth management platform includes asset management services by Lion Global Investors and brokerage services by OCBC Securities.
OCBC also acquired the coveted Asian private banking arm of Dutch giant ING in 2010 in a major deal worth US$1.46 billion.
DBS was said to have put in a bid similar to that of OCBC, although some sources said poaching fears may have made it think twice. What may have eventually swung the deal in OCBC's favour is that the Bank of Singapore is a standalone private bank.
A DBS spokesman would only say: "We will continue to grow our business, both organically and through acquisitions, and will be disciplined in evaluating and pursuing opportunities."
Bank of Singapore chief executive Bahren Shaari said the deal broadens its "geographical footprint and client coverage while adding scale".
The acquisition is expected to be completed by the end of the year. OCBC shares closed up nine cents to $8.81 yesterday.