Two Singapore banks compete with big players for ING assets

Costas Paris & P.R. Venkat
The Wall Street Journal

Oversea-Chinese Banking Corp. is competing with Singaporean rival DBS Group Holdings Ltd. and HSBC Holdings PLC to acquire the Asian private-banking assets of ING Groep NV, and analysts say a possible deal offers good growth prospects for either of the two Singapore banks.

A person familiar with the situation said Friday that OCBC has submitted a bid for the ING assets. The person didn’t say how much OCBC had bid.

Another person familiar with the situation said earlier that ING expects to raise $1.5 billion from the sale of the assets and that a deal should be finalized “within the next few weeks.”

“Private banking is a growing segment,” said DMG analyst Leng Seng Choon, adding that Asia will continue to see more high-net-worth individuals. “Any expansion in this area would help the Singapore banks improve their earnings. The question is how much they will pay for it.”

Another analyst with a U.S. brokerage firm said a deal for OCBC would help the bank expand its private-wealth-management business, which is relatively smaller compared with that of DBS.

“It’s beneficial because OCBC would be able to tap into their clientele, considering OCBC’s strength is not in private wealth management. ING’s people, provided they don’t leave, will be the main intangible asset OCBC can gain,” the analyst said.

Some expressed doubts about the suitability of the Singapore banks to buy the assets, saying that exposure of these banks in the private-banking business is relatively low compared with big players such as UBS and HSBC.

According to the latest 2007 report by Calamander Capital, a Singapore-based boutique investment manager, DBS is ranked in the middle-tier category in Asian-Pacific private banking in terms of assets under management; OCBC is in the lower-tier category. Buying ING’s assets would propel DBS to the top tier, putting it in the same league with UBS, Citigroup and HSBC, while OCBC would climb to the middle tier if it acquires the assets.

ING is targeting €6 billion to €8 billion euros ($8.87 billion to $11.82 billion) in asset sales to help pay down a €10 billion lifeline it received from the Dutch government last October to underpin its core capital.

Swiss wealth manager Julius Baer Holding AG said Wednesday that it would buy ING’s Swiss private-bank assets for $505 million. Last month, it sold to Australia and New Zealand Banking Group Ltd. a 51% stake in their Australia and New Zealand wealth-management and life-insurance joint venture for €1.1 billion.