DBS Bank To Acquire Societe Generale's Private Banking Business in Asia -- Update

By P.R. Venkat 

SINGAPORE--DBS Bank Ltd. said Monday that it is buying Société Générale SA's Asian private banking business for $220 million, capitalizing on the region's growing number of millionaires, as Western banks continue to retreat from the business of serving Asia's wealthy.

DBS's acquisition of the French bank's regional private banking operations comes three years after Oversea-Chinese Banking Corp., Singapore's second biggest bank after DBS, bought Dutch bank ING's private banking operations in Asia for $1.64 billion. Swiss private bank Julius Baer Group AG bought Bank of America's international private banking operations, including its Asian business, last year.

Some western banks began cutting back their presence in Asian private banking in the wake of the financial crisis as stringent regulatory requirements forced them to keep a higher capital base at home.

Société Générale put its Asian private banking operations, which it set up in 1997 out of Hong Kong and Singapore, for sale late last year, as it moved to bulk up its investment banking operations. Société Générale is in the process of expanding its debt capital market operations and financing business in Southeast Asia.

The acquisition of Société Générale's private banking assets in the region, with $12.6 billion of assets under management, will be a big boost for the wealth management operations of DBS Bank, which is 29% owned by state investment firm Temasek Holdings Pte. Ltd.

"Asia is growing in affluence and minting more millionaires that anywhere in the world. To capture opportunities on this front, one of DBS' strategic priorities is to be a leading wealth player," DBS chief executive Piyush Gupta said in note to his staff after the deal.

According to DBS, the bank's total wealth assets under management, including DBS Treasuries and DBS Private Bank, was 109 billion Singapore dollars (US$86 billion) as of the end of 2013. Of this, assets under management of high net worth individuals were S$69 billion, up from S$39 billion four years ago.

While some wealth managers continue to bulk up their presence in places such as Hong Kong and Singapore by expanding their offices and hiring people, wealth management has been hurt by slower economic growth, forcing private banks to focus on costs and keep a lid on compensation. A growing list of millionaires in China and beyond has attracted small boutique players who are jostling for market share against established heavyweights such as UBS AG and Credit Suisse Group AG.

The Asian-Pacific region will become the biggest wealth market by population this year, according to a 2013 report by Capgemini and RBC Wealth Management. Wealth in the Asian-Pacific region has increased by 27% since 2007, the same report said, putting Asia in line to overtake North America as the world's wealth center.

The transaction is expected to be completed in the last quarter of 2014 subject to regulatory approvals, DBS said in a filing to the Singapore Exchange.

Write to P.R. Venkat at [e-mail]

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