OCBC pays $1.5 bln for ING's Asia private
bank
* OCBC winner of ING's $16 billion Asia assets
* Beats HSBC, DBS dropped out earlier -sources
* OCBC pays 5.8 pct of ING private bank assets
* To expand beyond Asia; would consider further buy
* OCBC shares fall 1 pct, ING shares up 1.6 pct
By Clare Jim and Saeed Azhar
HONG KONG/SINGAPORE, Oct 15 - Banking group OCBC <OCBC.SI>
clinched a deal to buy Dutch-based ING Group NV's <ING.AS>
private banking unit in Asia for $1.5 billion in a deal which would
elevate it to Singapore's second-ranked bank by assets.
In the biggest deal in the private banking industry since the
financial crisis, OCBC beat HSBC Holdings Plc <HSBA.L>
<0005.HK> with a bid worth 5.8 percent of the target's
assets, or more than double what Julius Baer Group AG
<BAER1.VX> paid for ING's Swiss banking assets earlier this
month. [ID:nSIN287448]
"Pricing appears full given it's from a distressed seller and
the recent earnings stream looks highly leveraged and volatile,"
said Matthew Wilson, a banking analyst at Morgan Stanley, which has
an "underweight" rating on OCBC.
A number of private banking assets have come up for sale as
banks restructure following state bailouts and industry
consolidation is picking up pace. [ID:nLF187364].
OCBC will more than triple its private banking assets to $23
billion with the deal, moving from being Singapore's third-biggest
bank to second by assets after DBS <DBSM.SI>, which earlier
dropped out of the race to buy the ING assets.
CEO David Conner said the bank will now look to expand its
private bank operations beyond Asia and is considering a Middle
Eastern and European marketing team to attract new clients.
He said the dynamics of the Asian business, recovering from the
crisis but in a region seen as having many untapped millionaires,
was different to a more mature European market.
"We are not embarrassed in any way or surprised by the fact that
we paid what we think is a healthy price for the franchise," Conner
said. "This is a rare opportunity to acquire an Asian private bank
franchise."
Merrill Lynch/Capgemini see 8.8 percent growth a year until 2018
in the wealth of Asia's high-net worth individuals.
GOOD PRICE
ING's sale of its Asian private bank, with about $16 billion in
assets, is its third major disposal in less than a month and the
second in the Asia-Pacific region, as it seeks to restructure
following a government bailout in Oct. 2008.
Analysts said the price was good for ING but it was unfortunate
it was selling assets in the present market.
"ING continues to sell future profitability and presence in
important growth markets," SNS Securities said in a research
note.
OCBC shares erased early gains to close 1 percent down at
S$7.60, while ING rose 1.6 percent to 12.68 euros at 1025 GMT,
after reaching their highest level in almost a year.
OCBC said the deal would cut its Tier 1 capital by 1.5
percentage points to 13.9 percent. Conner said the bank had no need
to raise more capital and Standard & Poor's Ratings Services
said its OCBC ratings were unaffected by the deal
[ID:nnWLA5779].
Citigroup analyst Robert Kong said OCBC's Tier 1 capital
exceeded 12.5 percent, still giving it ample ammunition to seek
M&A opportunities.
OCBC's private bank, which lost a third of its bankers to
foreign rivals in 2006, is run by French national Olivier Denis,
but the integrated private bank will be run by the head of the ING
arm, Renato de Guzman. [ID:nSIN429740]
Conner said OCBC had come to a retention agreement with senior
ING staff.
ING is in the process of raising 6 billion euros to 8 billion
through asset sales under a restructuring programme announced in
April and plans to ultimately exit 10 of the 48 countries where it
does business. [ID:nL1574170]
The restructuring follows 10 billion euros in state aid ING
received in Oct. 2008 and a 22 billion euro asset guarantee it
received from the Dutch state in Jan. 2009.
--Reuters