DBS buys SocGen’s Asian private banking business

DBS Bank group head of consumer banking and wealth management Tan Su Shan (left) and Olivier Gougeon, regional chief executive officer, Asia Pacific  of Societe Generale private banking Asia attend a media briefing in Singapore yesterday. The Singapore bank said yesterday  it had agreed to buy the Asian private banking business of the French lender in a deal worth $220mn.

AFP/Singapore

Singapore’s DBS Bank said yesterday it had agreed to buy the Asian private banking business of French lender Societe Generale in a deal worth $220mn, boosting its access to the region’s super rich.

DBS said in a statement to the Singapore Exchange that the deal “will accelerate DBS’s ambition of becoming a leading wealth manager in Asia”.

The acquisition comes at a time of growing competition to manage the wealth of Asia’s growing ranks of millionaires and billionaires.

Under the agreement, DBS will buy Societe General’s Asian private banking operations in Singapore and Hong Kong and parts of its trust business.

“This transaction is in line with one of DBS’s strategic priorities to be a leading wealth manager in Asia and will significantly increase the scale of its wealth management business,” Singapore’s leading bank said.

Jean-Francois Mazaud, head of Societe Generale Private Banking, described DBS as “the most suitable choice”.

“The commercial partnership we intend to implement together will also represent a great opportunity for our private banking customers to fully benefit from the very best of the two banks in Europe and in Asia,” he said.

DBS’s clients will have access to Societe Generale Private Banking’s offerings in Europe, DBS said.

It said the deal would increase its high-net-worth assets under management by more than 20%.

“From a strategic perspective, this acquisition will propel DBS forward in its strategy to grow its regional financial services footprint and become a leading bank in the Asian wealth management industry, which is a very fast-growing segment of the global financial services industry,” said Rajiv Biswas, Asia Pacific chief economist at IHS Global Insight.

“The concentration of acquired assets in Singapore and Hong Kong is also positive in terms of the geographic distribution of assets under management, since Singapore and Hong Kong are the two leading international financial centres in Asia,” he told AFP.

Kenny Kan, market analyst at CMC Markets in Singapore, said the deal marked a “strategic positioning” by DBS “in view of the growing need for wealth management in Asia with its ever-increasingmnaires”.

DBS chief executive Piyush Gupta said in an internal memo to staff it was time for the Singapore bank to accelerate its private banking business through an acquisition.

“As you know, Asia is growing in affluence, and minting more millionaires every day than anywhere else in the world,” he said in the memo, a copy of which was seen by AFP.

He said that in the 2013 financial year, DBS’s wealth franchise, including the private banking business, reported record income of Sg$924mn ($730mn).

The bank managed wealth assets totalling Sg$109bn at the end of last year, he said.

Those of high-end clients came to Sg$69bn, up from Sg$39bn in 2010.

Calling the deal complementary, Gupta said Societe Generale Private Banking’s client base was largely focused on “ultra high net worth” individuals, many of whom come from outside Southeast Asia.  DBS’s expertise is “predominantly in Asian investment products and deal flows”, he said.

Gupta said the deal should be completed by the end of the year following legal and regulatory approvals.

The deal comes as Asia’s strong economic growth results in a boom in the ranks of the ultra-rich.

Property consultancy Knight Frank said in a recent report that Asia will have the most number of billionaires worldwide at 809 by 2023, overtaking Europe. The number is up 66% from 2013.

The number of billionaires in China alone by 2023 is projected to exceed the total in Britain, Russia, France and Switzerland combined, it said.

Asia is also forecast to have increasing numbers of people with investible assets of at least $30mn – called ultra high net worth individuals – as well as those with $100 at least million, called centimillionaires, the report said.

DBS shares rose 0.38% to Sg$15.79 in mid-afternoon trade, as the Straits Times Index added 0.33%.