SINGAPORE / Reuters
Barclays has agreed to sell its wealth and investment management business in Hong Kong and Singapore to Oversea-Chinese Banking Corp (OCBC), as the British lender continues its drive to reduce risk and simplify.
OCBC, Singapore’s second-biggest lender, said on Thursday it had agreed to pay $320 million for the units – its second-largest private banking deal since 2009 and deepening its presence in Southeast Asia, Greater China and the Middle East.
The sale is part of drastic restructuring measures by Barclays’ new chief executive, Jes Staley, and comes as several European banks rethink their Asian strategy due to pressure at home to cut costs.
“The sale of our wealth and investment management business in Singapore and Hong Kong marks further progress in our aggressive pursuit of non-core cost and risk weighted asset reductions,” Staley said in Barclays’ announcement on Thursday.
Barclays shares dipped by 0.6 percent by 1000 GMT in London.
OCBC’s purchase price was set at 1.75 percent of Barclays’ $18.3 billion in assets in Singapore and Hong Kong, similar to what DBS Group Holding paid for the Asian private bank of Societe Generale in 2014.
DBS, the only other bidder in the final round for the Barclays assets, had been seen as an early favourite to win, people close to the auction said.
But it failed to bid aggressively amid talk several bankers at the Barclays units were negotiating to go elsewhere following the departure of Barclays Asian wealth chief Didier von Daeniken for Standard Chartered in December, they added. The head of Barclay’s wealth management business for South Asia also left in January.
Poaching is always more of a risk for private banks than for other industries as clients will often stay loyal to their bankers and move assets with them.
“There is no regret at DBS for losing this,” said a person with knowledge of the bank’s strategy.
A DBS spokesman declined to comment directly on the Barclays deal, saying only that Singapore’s biggest lender would be disciplined in how it expanded its wealth business.
OCBC declined to comment on whether it would provide retention packages to keep bankers at Barclays.
Singapore’s banks have been keen to pick up wealth management assets put up for auction by Western banks, many of which are in retreat as they focus on their own markets.
Bahren Shaari, chief executive at OCBC’s Bank of Singapore, told Reuters he expected the integration would be smooth as the two businesses were led by teams which share the same operating and management philosophy.
The deal is set to boost OCBC’s private banking assets by a third to $73.3 billion, putting it just below DBS which is ranked by Asian Private Banker as the sixth-biggest private bank in Asia. The number of private bankers at OCBC’s Bank of Singapore will climb by 88 to 400.
It is OCBC’s second major acquisition since it pounced on the Asian wealth unit of Dutch lender ING in 2009.
Credit Suisse advised OCBC on the deal, while Lazard advised Barclays, sources said.