Australia & New Zealand Banking Group Ltd’s (ANZ) sale of businesses in five Asian markets to DBS Group Holdings Ltd offers the latest sign of consolidation in the region’s highly competitive wealth industry, which has already seen a retreat by European players such as Barclays Plc and Societe Generale SA.
DBS will pay S$110 million (US$79 million) for retail and wealth-management businesses that ANZ operates in Taiwan, Singapore, Hong Kong, China and Indonesia.
The deal will add S$23 billion of wealth assets to DBS’s books, taking its total assets under management to S$182 billion, it said in a stock-exchange filing.
Photo: Bloomberg
Like many of its competitors, DBS expanded its wealth business in recent years to profit from Asia’s burgeoning ranks of millionaires, and is now seeking to capitalize on the retreat of rivals who are under pressure to cut costs and focus on higher-returning businesses.
DBS bought Societe Generale’s Asian wealth-management division in 2014 and is said to be considering a bid for ABN Amro Group NV’s private-banking business in the region.
“Times are bad but this is also when assets are cheap,” Kevin Kwek, an analyst at Sanford C. Bernstein & Co, said in an e-mailed reply to questions. “You have a situation where one man’s poison is another man’s meat.”
Earlier this year, DBS lost out to smaller Singaporean competitor Oversea-Chinese Banking Corp (華僑銀行) in buying Barclays’s wealth and investment-management business in Asia.
Bahren Shaari, the chief executive officer of OCBC’s private-banking arm last year foreshadowed more consolidation in wealth management Asia as smaller players find it harder to offer the range of services demanded by the rich.
ANZ said it will take a A$265 million (US$201 million) loss on the deal, which marks a major step in chief executive officer Shayne Elliott’s drive to unwind his predecessor’s expansion into Asia. The bank had previously been seeking to earn as much as 30 percent of profit from outside Australia and New Zealand by next year.
“Our strategic priority is to create a simpler, better capitalized, better balanced bank focused on attractive areas where we can carve out winning positions,” Elliott said in a statement to the stock exchange.
ANZ will focus its resources in Asia on institutional banking, he said.
The Melbourne-based lender is still reviewing its businesses in Cambodia, Laos, Vietnam and the Philippines, Elliott said on a call with investors.
DBS is aiming to complete the purchases from ANZ by early 2018, the bank said.
The businesses being acquired have total deposits of S$17 billion, loans of S$11 billion and serve about 1.3 million customers, including 100,000 high net-worth individuals, the bank said.
The lender was ranked fifth in terms of assets under management last year, according to figures compiled by Private Banker International.
UBS Group AG and Citigroup In. were ranked first and second respectively, each with assets exceeding US$200 billion.
“DBS has made significant strides in the wealth business, and recently became the first Singapore and Asian bank to break into the top five private banks in Asia-Pacific,” Tan Su Shan, the lender’s consumer banking and wealth management head, said in the statement. “This acquisition will further cement our leadership position.”
Separately, DBS, Southeast Asia’s largest lender, yesterday said that net income was little changed at S$1.07 billion in the three months to September from a year earlier as soaring allowances for credit and other losses offset gains from non-interest income.
Provisions for soured assets jumped to S$436 million from S$178 million a year ago.
TAIWAN
The acquisition will expand DBS’ customer base in Taiwan by 530,000 or by about 2.5 times, it said, adding that a significant portion of these are credit card customers.
Taiwan has delivered a solid growth performance in DBS’ consumer banking since the acquisition of Bowa Bank (寶華銀行) in 2008, and the latest expansion would help strengthen the company’s presence in the Taiwan market, DBS Bank (Taiwan) general manager Jerry Chen (陳亮丞) said.
DBS is also expected to take on the majority of staff in the ANZ’s wealth management and retail banking units, Elliott said.
ANZ Bank Taiwan has about 1,200 employees in Taiwan, including supporting function departments, a company official said.
Additonal reporting by Ted Chen
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