SINGAPORE: Oversea-Chinese Banking Corp (OCBC) has acquired the wealth and investment management business of Barclays Bank in Singapore and Hong Kong for US$320 million (S$430 million) in cash.
The acquisition was done through its private banking arm Bank of Singapore, OCBC said in a filing to the Singapore Stock Exchange on Thursday morning (Apr 7).
The purchase price is indicative, based on the assets under management of Barclays' wealth and investment management business in the two locations of US$18.3 billion.
Bank of Singapore will use its own cash to fund the acquisition, OCBC said, adding that the acquisition will see its subsidiary's assets under management rise by 33.3 per cent to US$73.3 billion.
In a ranking by Asian Private Banker released on Wednesday, Bank of Singapore was ranked the 11th largest private bank in the Asia-Pacific based on assets under management at the end of 2015. The latest acquisition will push it up to seventh place among private banks in the region, just behind DBS but ahead of Morgan Stanley and Deutsche Bank.
The transaction is expected to be completed by end-2016 and is subject to approval of Singapore's High Court for the transfer of the Singapore business.
“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,” said OCBC Group CEO Samuel Tsien.
Reuters reported in February that other than OCBC, Singapore's DBS Group and Swiss bank Julius Baer had also submitted non-binding bids for Barclays' Asian private wealth business.
The sale is part of a restructuring drive under Barclays new Chief Executive Jes Staley and comes as several European banks rethink their Asian strategy due to pressure at home to cut costs.
Barclays managed US$36 billion in private banking assets in Asia as of last year, according to a survey by industry publication Private Banker International that ranked it 14th by managed assets in Asia.
Mr Jack Wang, a partner at Raffles Investment, told Channel NewsAsia there could be further consolidation among private banks in the region due to savings that could be derived from economies of scale.
He said: "Private banking requires scale ... For all the smaller private banks, unless they have independent corporate offices to subsidise them, consolidation is definitely the way to go. We will probably end up with three to five players globally or on a regional basis."
OCBC shares closed 1 per cent higher on Thursday.