* Race for the bank was between DBS, ABN AMRO -sources
* This would be third major transaction in Asia private
* Will likely boost DBS's assets by a third
By Saeed Azhar and Denny Thomas
SINGAPORE/HONG KONG, Jan 22 Singapore's DBS
Group Holdings is in advanced talks to buy Societe
Generale's Asian private bank, a deal that would help
boost its private banking assets by almost a third, sources
familiar with the matter said.
It was unclear how much Southeast Asia's biggest lender
would be willing to pay for the bank, but previous estimates
from financial sources have valued it at between $300 million
and $400 million.
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
DBS managed $46 billion in private banking assets at the end
of 2012 and that could rise by another $15 billion if it takes
over SocGen's Asia unit, the sources said. That would make it
Asia's sixth or seventh largest private bank in an industry
dominated by UBS and Citigroup with assets of
more than $200 billion each.
Sources said the discussions between DBS and SocGen were
advanced, with one characterising the talks as being at a
"delicate stage.". They declined to be identified as they were
not authorised to speak to the media.
A DBS spokeswoman reiterated the bank's stance that boosting
wealth management is one of its key strategic priorities but
declined to comment on the possibility of talks. A
Singapore-based SocGen spokeswoman declined to comment.
DBS and ABN AMRO had emerged as front runners after five
suitors were short-listed in the final round of bids, the
sources said. It was not immediately clear if ABN AMRO was still
in the picture.
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 those levels don't generate enough
revenue to support expensive bankers and cope with rising
regulatory costs and technology spending.
Societe Generale's private bank sale follows two major
transactions since the financial crisis - the sale of ING's
private bank in late 2009 to Oversea-Chinese Banking Corp
and Bank of America's sale of its Asian and
European private banking units to Julius Baer.
The industry has also seen smaller deals such as the sale of
HSBC's private bank in Japan to Credit Suisse
and Julius Baer's taking over of Macquarie Group's
private banking unit in Asia.