By Saeed Azhar and Denny Thomas
SINGAPORE/HONG KONG (Reuters) - Singapore's DBS Group Holdings
A successful deal would make it the third major transaction in Asia's competitive private banking landscape since the global financial crisis, as smaller players struggle to generate enough revenue to support expensive bankers and rising regulatory costs.
Swiss bank Credit Suisse
Societe Generale's Asian private bank unit manages about $13 billion, below the $20 billion mark that the industry has come to see as necessary for critical mass in the region.
Economic growth has led to a surge in Asian millionaires and billionaires. Their combined wealth, at $6.6 trillion this year, is expected to overtake that of their European counterparts in 2017 and U.S. peers in 2024, according to a Wealth-X and UBS World Ultra Wealth Report.
But profit margins are thin for the industry's smaller players, especially those managing less than $20 billion, because the asset bases at the level don't generate enough revenue to support expensive bankers and cope with rising regulatory costs and technology spending.
Initial price expectations for the Societe Generale business ranged from between $300 million to $600 million, but a person with direct knowledge of the matter told Reuters the business is being valued at around $400 million.
Sources declined to be identified as they are not authorized to talk to the media.
A Societe Generale spokeswoman in Singapore declined to comment. DBS, Credit Suisse and ABN AMRO also declined to comment.
DBS, which managed $46 billion in private banking assets at the end of 2012, is seen by many as a leading contender for the unit and CEO Piysuh Gupta told an earnings briefing this month the bank would look at Asian wealth businesses.
DBS's private banking assets are slightly bigger than Bank of Singapore, the wealth unit of Oversea-Chinese Banking Corp
DBS's private bank was ranked 9th and OCBC 10th in a survey on Asian wealth managers by industry publication Private Banker International. http://link.reuters.com/pap54v.
OCBC which paid $1.5 billion to acquire ING's private banking business in Asia in 2009, managed to triple its private banking assets at the time of the deal.
It has partly helped OCBC boost its fee income by five times from 2009 to 2012, the bank said.
"DBS wants to get decisively bigger," said James Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd. "They are playing catch-up with OCBC, which moved at the right time and got the right scale of business."
He said DBS's management seems to still be in a deal-making mode despite the collapse of talks to buy Indonesia's PT Bank Danamon
UBS, Standard Chartered declined to comment. RBC was not immediately available to comment.
Societe Generale's private bank sale follows two major transactions since the financial crisis, including the sale of ING's private bank in late 2009 to OCBC and Bank of America's
The industry has also seen smaller deals such as the sale of HSBC's
(Additional reporting by Katharina Bart in ZURICH; Editing by Edwina Gibbs)
- Banking & Budgeting
- Societe Generale
- Credit Suisse
- ABN AMRO
- private banking
- DBS Group Holdings