OCBC’s Barclays Bid Boosts Singapore’s Private Banking Heft

Euromoney, May 2016

Two things happened within a week of each other in April, both illustrating the same pattern from a different direction.

First, OCBC’s subsidiary Bank of Singapore was confirmed as the winning bidder for Barclays’ private banking operations in Asia, paying $320 million for a $18.3 billion, 1,800-client asset book. Then, a few days later, JPMorgan confirmed reports of a series of cuts in its own Asian private banking division, stripping out potentially 20% of its relationship manager headcount.

This seems to be the way of things in Asian private banking lately: home-grown, chiefly Singaporean, enterprises staffing up and pursuing ambitious regional plans; and all but the biggest western multinationals either selling out of the business or cutting headcount within it.

In fact, the very existence of Bank of Singapore marks the start of this trend: the bank came into being because of it. It was only in 2010 that OCBC bought ING Asia Private Bank for $1.46 billion and renamed it Bank of Singapore, pouring in OCBC’s modest existing private banking business to get it started. The subsequent six years have seen a gradual rise to relevance, with assets doubling from launch to $55 billion before the Barclays deal, augmented by another acquisition, Wing Hang Bank. Assuming the assets stick, the Barclays deal lifts AuM by one-third again, to $73.3 billion – enough to put a bank that didn’t exist at the start of the decade into the top 10 for regional private banking.

OCBC/Bank of Singapore is not the only home-grown bank to benefit from the decisive exits of Europeans. DBS did something similar in 2014 when it paid $220 million for Société Générale’s Asian private banking business in Singapore and Hong Kong, bringing in $12.6 billion in new assets. DBS was a bidder for the Barclays assets this time too, as was UOB, creating a grand slam of Singaporean banking interest in the Barclays team and asset book. When the next western institution bails from the region – and it’s surely only a matter of time – the same Singaporeans are likely to be at the forefront once again.

Bahren Shaari, chief executive of Bank of Singapore, says the pattern is a function of increasing Asian wealth and an expected consequent demand for professional managers to service the people who have that wealth. “Private banks in this region need to adapt their business models to meet the growing demand,” he says. “With the rising cost of doing business, banks need to achieve scale, so further consolidation is inevitable.”

Full article: http://www.euromoney.com/Article/3551154/Asia-OCBCs-Barclays-bid-boosts-Singapores-PB-heft