* Sees China as driving Asian activity; already entrenched
in Southeast Asia
* Would raise stake in local China bank if ownership limit
* No comment on Wing Hang Bank buy negotiations
* Drop in new Singapore mortgages to hit earnings in
(Adds comments on China strategy, wealth management, Singapore
By Saeed Azhar and Rachel Armstrong
SINGAPORE, March 24 Oversea-Chinese Banking Corp
Ltd (OCBC) aims to expand in Greater China which it
sees as the engine of Asian economic activity, rather than in
another market in Southeast Asia where Singapore's
second-biggest lender is already well entrenched.
OCBC, No. 2 to DBS Group Holdings Ltd by assets,
is trying to expand outside its core markets of Singapore,
Malaysia and Indonesia, which together accounted for 90 percent
of the bank's pre-tax earnings last year.
In China, OCBC wants to raise its stake in Bank of Ningbo
to the maximum permitted, and in Hong Kong, OCBC is
in talks to buy family-owned Wing Hang Bank Ltd for
what could be a record amount for the Singaporean player.
"From our perspective, I think we would be more interested
to go into the Greater China market rather go into another ASEAN
market at the present time," Chief Executive Samuel Tsien said
at the Reuters ASEAN Summit on Monday.
ASEAN, or the Association of Southeast Asian Nations, is
made up of OCBC's three core markets plus Brunei, Cambodia,
Laos, Myanmar, the Philippines, Thailand and Vietnam.
"China's economic activity is really driving the economic
activities of Asia right now plus the fact that Chinese
companies' desire to move offshore has also created additional
opportunities for us," Tsien said at the summit, held at the
Reuters office in Singapore.
Greater China - or China, Taiwan and Hong Kong - accounted
for 6 percent of OCBC's pre-tax earnings last year, compared
with 2 percent four years ago, Tsien said.
OCBC sought to increase that amount in January when it
proposed raising its stake in Ningbo in Zhejiang province from
15 percent to 20 percent - the maximum a foreign investor can
hold in a bank in China. OCBC is awaiting Chinese regulatory
"In the event that they are willing to relax it (the 20
percent limit) we are quite interested to increase our
involvement," Tsien said.
China's banking system, like the country's broader economy,
has undergone a series of reforms in recent years as the
government increasingly leans toward market forces and away from
Tsien did not say whether he is expecting an increase in the
ownership cap soon, but said he does not expect foreigners to be
able to own majority stakes in Chinese lenders.
OCBC faces no such restrictions in Hong Kong, where the bank
has been in talks to buy Wing Hang for what sources close to the
deal estimated at $5.3 billion.
The pair has twice extended the deadline for any agreement,
and with the latest deadline of March 31 looming, OCBC on Friday
said the two have still not reached a deal. Tsien declined to
comment on the deal on Monday.
Beyond geography, Tsien said OCBC is interested in expanding
its wealth management business, provided any potential deal is
not merely incremental given the decent size of its current
"At the present time unless there is a market opportunity
that is able to bring us to a significantly higher plateau then
I think we will rely on what we currently have," Tsien said.
OCBC more than tripled the size of its wealth management
business in 2009 when it bought ING Groep NV's Asian
private banking business for $1.5 billion, sparking broader
Last week, rival DBS said it would buy Societe Generale's
Asian private banking business for $220 million.
At home in Singapore, government and central bank measures
to curb the rise of property prices have slowed growth in
mortgages and lending to property companies, which account for
about a third of bank loans in Singapore.
The value of new mortgages at OCBC has fallen about 40
percent so far this year compared with the first quarter of
2013, Tsien said. As there are still many customers receiving
housing loans previously agreed, the impact will only be felt
next year, he said.
"If the market continues to be in a very low activity level
the mortgage loan volume will start to show up in our balance
sheet probably in the second half of next year," he said.
A rise in interest rates will not have an impact because the
bank has already underwritten loans taking into account
customers' capacity to absorb higher rates, Tsien said.
Shares of OCBC closed up 1.1 percent in Singapore on Monday
compared with a 1.4 percent rise in the benchmark stock index
. The shares have fallen 7.8 percent so far this year,
more than rivals DBS and United Overseas Bank Ltd.
(Editing by Christopher Cushing)