As finews.asia had predicted Singaporean bank OCBC has won the race to acquire the Singapore and Hong Kong private wealth units of U.K. bank Barclays.
OCBC announced to the Singapore Stock Exchange that its wholly-owned private banking subsidiary, Bank of Singapore, has entered into an agreement to acquire the Wealth and Investment Management business of Barclays Bank PLC in Singapore and Hong Kong (Barclays WIM Singapore and Hong Kong) for approximately $320 million in cash.
With the addition of Barclays WIM Singapore and Hong Kong, Bank of Singapore’s AUM will rise by 33.3 percent to $73.3 billion. As there is little overlap in client relationships between Bank of Singapore and Barclays WIM Singapore and Hong Kong, the franchise value of Bank of Singapore is expected to be significantly enhanced. This will enable Bank of Singapore to accelerate growth in its key markets.
Strategically Justified
«The wealth management business is strategically important for OCBC. The acquisition of Barclays Wealth and Investment Management business in Singapore and Hong Kong further broadens our wealth management franchise, firmly establishing us as a leading wealth management player in Asia,» said Samuel Tsien CEO of OCBC Banking Group.
«The deal really propels Bank of Singapore/OCBC into the top tier of private banks in Asia and is strategically justified in addition to a fair price paid,» said Ray Soudah, CEO of Millenium Associates during his current visit to Singapore. Millenium Associates is a Swiss and international M&A Advisory firm to the wealth industry.
Deal Details
The purchase price is set at 1.75 percent of Barclays WIM Singapore and Hong Kong’s assets under management that are transferred to Bank of Singapore upon the completion of the transaction.
Based on Barclays WIM Singapore and Hong Kong’s AUM of $18.3 billion at 31 December 2015, the indicative purchase price is $320 million. Bank of Singapore has sufficient financial resources, through its own internal cash, to fund the acquisition.
The acquisition is expected to be accretive to OCBC Bank’s earnings per share and return on equity after the first year. The transaction will have minimal impact on OCBC Bank’s capital position, which will remain robust following the completion of the transaction. The transaction is subject to approval of the Singapore High Court for the transfer of the Singapore business. The transaction is expected to be completed towards the end of 2016.
