Bank of Singapore to acquire Barclays Bank PLC's wealth and investment management business in Singapore and Hong Kong
Singapore, 7 April 2016 – OCBC Bank ("the Bank") announced today that its wholly-owned private banking subsidiary, Bank of Singapore, has entered into an agreement to acquire the Wealth and Investment Management business of Barclays Bank PLC in Singapore and Hong Kong ("Barclays WIM Singapore and Hong Kong") for approximately US$320 million in cash.
The purchase price is set at 1.75% of Barclays WIM Singapore and Hong Kong’s assets under management ("AUM1") that are transferred to Bank of Singapore upon the completion of the transaction. Based on Barclays WIM Singapore and Hong Kong’s AUM of US$18.3 billion at 31 December 2015, the indicative purchase price is US$320 million. Bank of Singapore has sufficient financial resources, through its own internal cash, to fund the acquisition.
The acquisition is expected to be accretive to OCBC Bank’s earnings per share and return on equity after the first year.
The transaction will have minimal impact on OCBC Bank’s capital position, which will remain robust following the completion of the transaction. The transaction is subject to approval of the Singapore High Court for the transfer of the Singapore business. The transaction is expected to be completed towards the end of 2016.
Rationale for Proposed Acquisition
Broadening OCBC Bank’s Wealth Management Franchise
The acquisition of Barclays WIM Singapore and Hong Kong furthers OCBC Bank’s strategic goal of deepening its presence in its four core markets – Singapore,
Malaysia, Indonesia and Greater China – and particularly in its wealth management business.
Over the years, through strategic acquisitions and organic growth, OCBC Bank has built a unique and comprehensive wealth management platform across the Bank and its subsidiaries. This platform comprises private banking services offered by Bank of Singapore, life insurance by Great Eastern Holdings, asset management by Lion Global Investors, brokerage services by OCBC Securities, as well as other wealth management products and services offered by the Bank. OCBC Bank’s consolidated wealth management income across its group of companies has grown steadily over the years. That income reached S$2.35 billion in 2015, up 6% from a year ago, and amounted to 27% of the OCBC Group’s total income.
Barclays WIM Singapore and Hong Kong brings with it a base of more than 1,800 clients, with total AUM of US$18.3 billion as at 31 December 2015, in two of OCBC Bank’s core markets – Singapore and Greater China. Within the Asia Pacific region, where HNWI (high net worth individual) wealth is expected to continue expanding rapidly, both Singapore and Hong Kong feature as leading wealth management and private banking centres. Thus OCBC Bank’s wealth management franchise across its core markets will be significantly broadened with the addition of Barclays WIM Singapore and Hong Kong.
Strengthening Bank of Singapore’s position as Asia’s Global Private Bank
Barclays WIM Singapore and Hong Kong’s client base, geographical coverage and talent pool provide an excellent and complementary fit for Bank of Singapore.
The acquisition further positions Bank of Singapore to capture opportunities in the two strategic private banking hubs in Asia, Singapore and Hong Kong. Barclays WIM Singapore and Hong Kong has strong coverage of UHNW (ultra high net worth) clients and entrepreneurs. This will reinforce Bank of Singapore’s coverage of UHNW clients today, further expanding its client base and strengthening its foundation to attract new clients throughout the region.
With the addition of Barclays WIM Singapore and Hong Kong, Bank of Singapore’s AUM will rise by 33.3% to US$73.3 billion. As there is little overlap in client relationships between Bank of Singapore and Barclays WIM Singapore and Hong Kong, the franchise value of Bank of Singapore is expected to be significantly enhanced. This will enable Bank of Singapore to accelerate growth in its key markets.
With a strong reputation for good client service, Barclays WIM Singapore and Hong Kong has an attractive talent pool including 88 highly-trained and experienced relationship managers, with an average of more than five years with the Barclays WIM business. Following the completion of the acquisition, Bank of Singapore will have a total of about 400 relationship managers to serve its enlarged client base, and will be strongly positioned for further increases in AUM as it deepens its market penetration.
Enhancing Value for Barclays WIM Singapore and Hong Kong Clients
Bank of Singapore and Barclays WIM Singapore and Hong Kong both operate on an open-architecture product platform, working with strategic partners to provide a range of product and investment solutions.
Bank of Singapore has over the years built strong Managed Investments capabilities, complemented by wealth planning and premium advisory services and supported by one of the largest research teams in Asia. Bank of Singapore also offers its UHNW clients an Advisory Portfolio Management service that combines the investment principles and risk management framework of Discretionary Portfolio Management with active client participation and validation. In addition, Bank of Singapore offers premium foreign exchange trading and equity services for more sophisticated investors.
Clients of Barclays WIM Singapore and Hong Kong will benefit from Bank of Singapore’s strong research and advisory capabilities. Bank of Singapore leverages a team of more than 50 in-house research analysts and product specialists covering over 1000 securities and 30 currencies, in addition to partnerships with leading independent research houses.
As part of the OCBC Group of companies, Bank of Singapore is also able to extend OCBC Bank’s commercial banking capabilities to its clients including a broad array of consumer and corporate banking, corporate finance and treasury services across the Bank’s regional and international network. Beyond private banking services, clients of Bank of Singapore also have access to personal and business banking services, as well as investment opportunities offered by OCBC Bank and its subsidiaries.
Ensuring a Smooth Integration
OCBC Bank has extensive experience from its acquisitions in past years and has demonstrated its ability to extract and create value by building on complementary strengths. The Bank has been able to retain employees and customers; and over time, it has increased staff strength and grown its customer numbers.
This was the case with ING Asia Private Bank, which it acquired in 2010 and renamed Bank of Singapore after combining it with its then private banking business.
Bank of Singapore has made great strides, including seeing its AUM more than double to US$55 billion and becoming a leading private bank in Asia.
Wing Hang Bank, which the Bank acquired in 2014, has similarly reaped the benefits of being part of the larger OCBC Group. The successful transfer of product development, risk and sales management capabilities from the OCBC Group, especially in the areas of wealth management and treasury, has enhanced the franchise value of the renamed OCBC Wing Hang, which saw its net profit rise 19.2% in 2015, substantially outperforming the market. This has been achieved through the deepening of customer relationships with the offering of a broadened range of products and services.
With Barclays WIM Singapore and Hong Kong, the emphasis will similarly be on ensuring a smooth integration such that Bank of Singapore continues supporting the needs of its new clients seamlessly. Of equal importance, Bank of Singapore will support the continued career development of its new employees.
Statement from Mr Bahren Shaari, CEO, Bank of Singapore
"We are delighted to have the opportunity to add Barclays Wealth and Investment Management business in Singapore and Hong Kong to complement Bank of Singapore’s already solid position as Asia’s Global Private Bank. Strategically, this acquisition further broadens our geographical footprint and client coverage while adding scale, deepening our presence in our core Asian markets, including Southeast Asia, Greater China and the Middle East, namely the Gulf Cooperation Council countries.
The combination of both businesses, including Barclays’ valuable franchise, will bring about attractive synergies. With a larger pool of well-trained and experienced relationship managers, we can serve a larger base of UHNW and HNW clients, offering Bank of Singapore’s comprehensive range of investment ideas and solutions and strong research capabilities. Existing Barclays clients can benefit from our connectivity in key markets including China, Indonesia and Malaysia, in the commercial banking space.
Our employees are key to Bank of Singapore’s success and we believe in investing in tailored training programmes and skills upgrading in order to develop and maintain a pool of knowledgeable, professional and trusted advisors for our clients. Likewise, we place significant value on the expertise and experience of Barclays’ talent pool and look forward to welcoming them as an integral part of Bank of Singapore."
Statement from Mr Samuel Tsien, Group CEO, OCBC Bank
"The wealth management business is strategically important for OCBC. The acquisition of Barclays Wealth and Investment Management business in Singapore and Hong Kong further broadens our wealth management franchise, firmly establishing us as a leading wealth management player in Asia.
We see attractive value in Barclays’ strong and complementary private banking client base in Singapore and Hong Kong, as well as in its experienced and service-oriented wealth management team. The enlarged scale and expanded client coverage that Bank of Singapore now possesses will significantly strengthen its position as Asia’s Global Private Bank, as it captures the growing wealth and serves the wealth management needs of high net worth clients in the region.
We look forward to welcoming the clients and colleagues from Barclays Wealth and Investment Management business in Singapore and Hong Kong into the OCBC family. We will ensure that the integration is smooth and that Bank of Singapore supports the needs of its new clients with a more expanded suite of products and network. And equally importantly, the enlarged platform will support the continued career development of our new colleagues."
Statement from Mr Akshaya Bhargava, CEO, Barclays Wealth, Entrepreneurs & Business Banking
"We believe that in Bank of Singapore and its parent OCBC Bank we have found a buyer that satisfies our core criteria of maintaining a consistent service for our clients and that has the scope to integrate and enhance the careers of our colleagues. Our priority is supporting all our impacted colleagues and clients throughout this transition. I want to take this opportunity to thank our colleagues in the business we are selling for their hard work and professionalism which has built strong client relationships over many years and has made this business so attractive to OCBC Bank."
As of the date hereof, none of the Directors and the substantial shareholders of OCBC Bank or their respective associates has any interest, direct or indirect, in the transaction, other than that arising from their respective shareholdings in OCBC Bank, if any.
1 Applicable AUM include deposits but exclude assets under administration and lending to clients.