OCBC to buy Barclays Asia wealth business

The OCBC Skyway at Singapore’s South Bay. Source: Flickr

Singapore’s Oversea-Chinese Banking Corporation (OCBC) has announced it is acquiring British bank Barclays’ wealth and investment management (WIM) assets in Singapore and Hong Kong for US$320 million.
Its private banking subsidiary, Bank of Singapore, entered into a deal to acquire the entities, OCBC said.
OCBC beat DBS Group Holdings, the other remaining bidder, after a process that saw several interested Asian and European parties taking interest initially.
With the addition of the WIM business in Singapore and Hong Kong, OCBC’s Bank of Singapore will see its managed assets rise by about 33 per cent to US$73.3 billion.
“The acquisition of Barclays WIM Singapore and Hong Kong furthers OCBC Bank’s strategic goal of deepening its presence in its four core markets, Singapore, Malaysia, Indonesia and greater China, and particularly expands its wealth management business,” the bank announced.
“At the same time, it strengthens Bank of Singapore’s position as Asia’s global private bank and enhances value for Barclays WIM Singapore and Hong Kong clients.”
OCBC’s consolidated wealth income, which includes life insurance by Great Eastern Holdings, asset management of Lion Global Investors and brokerage services by OCBC Securities, reached US$1.74 billion last year, making up around 27 per cent of the group’s total income.
OCBC said it would ensure a smooth integration. The statement said: “The Bank of Singapore [will] continue supporting the needs of its new clients seamlessly” and the careers of new employees.
“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 OCBC Bank Group CEO Samuel Tsien.
“We see attractive value in Barclays’ strong and complementary private banking client base in Singapore and Hong Kong, as well as in its experienced and service oriented wealth management team. The enlarged scale and expanded client coverage that Bank of Singapore now possesses will significantly strengthen its position as Asia’s Global Private Bank, as it captures the growing wealth and serves the wealth management needs of high net worth clients in the region.”
Barclays Wealth and Investment Management CEO Akshaya Bhargava said: “We believe that in Bank of Singapore and its parent OCBC Bank we have found a buyer that satisfies our core criteria of maintaining a consistent service for our clients and that has the scope to integrate and enhance the careers of our colleagues.”
Barclays’ Wealth and Investment Management’s priority was to support all affected staff and clients through the transition, he added.
OCBC said Bank of Singapore had the capital, through its internal cash, to finance the acquisition.
The price was set at 1.75 per cent of Barclays WIM Singapore and Hong Kong’s assets under management (AUM) that will be transferred to Bank of Singapore upon the completion of the deal.
Based on Barclays WIM Singapore and Hong Kong’s AUM of US$18.3 billion as of the last day of last year, the indicative purchase price is US$320 million.
It is anticipated that the buyout will be accretive to OCBC Bank’s earnings per share and return on equity after the first year.
The institution announced that the transaction would have minimal impact on OCBC Bank’s capital position, which would remain robust following the deal.
The transaction was subject to the approval of the Singapore High Court and was due to be completed towards this year, he said.