UPDATE: OCBC Bids For ING's Asian Assets - Source

Oversea-Chinese Banking Corp. (O39.SG) is in fray with its Singaporean rival DBS Group Holdings Ltd. (D05.SG) and HSBC Holdings Plc (HBC) for acquiring the Asian private banking assets of ING Groep NV (ING), and analysts say that a possible deal will offer good growth prospects for any of the two Singaporean banks.

A person familiar with the situation said Friday that OCBC has submitted a bid for the Asian private banking assets of ING. The person didn't say how much OCBC has bid.

Another person familiar with the situation said earlier that ING expects to raise US$1.5 billion from the sale of its Asian private banking assets and that a deal should be finalized "within the next few weeks."

HSBC was a frontrunner in the bidding for the Asian assets, people familiar with the situation had said earlier.

"Private banking is a growing segment. Any expansion in this area would help the Singapore banks improve their earnings. The question is how much they will pay for it," DMG analyst Leng Seng Choon said.

He said that Asia will continue to see more high net worth individuals.

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

However, some expressed doubts about the suitability of the Singaporean banks to buy the assets, saying that exposure of these banks in the private banking business is relatively low compared with big players like UBS and HSBC.

"I am skeptical as none of the banks have a huge presence in private banking," another analyst with a local research firm said. "If you get into private banking, you are directly competing with big players and both DBS and OCBC don't have that kind of international exposure or infrastructure in this field."

According to the latest 2007 report by Calamander Capital, a Singapore based boutique investment manager, DBS is ranked in the mid-tier category in Asia-Pacific private banking in terms of assets under management, while 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 mid-tier if it acquires the assets.

ING is targeting EUR6 billion-EUR8 billion in asset sales to help pay down a EUR10 billion lifeline it received from the Dutch government last October to underpin its core capital.

On Wednesday, Swiss wealth manager Julius Baer Holding AG (BAER.VX) said it would buy ING's Swiss private bank assets for US$505 million. Last month, it sold to Australia and New Zealand Banking Group Ltd. (ANZBY) a 51% stake in their Australia and New Zealand wealth management and life insurance joint venture for EUR1.1 billion.

-By Costas Paris and P.R. Venkat; Dow Jones Newswires; [phone]; costas.paris @dowjones.com; [e-mail]

 (Frankie Ho contributed to this report)