The transaction, which also includes “selected parts” of French bank’s trust business, is valued at US$220m (SGD278.39m, £132.25m). The price represents about 1.75% of Société Générale Private Banking Asia’s (SGPB Asia) assets under management worth US$12.6bn (SGD16.0bn, £7.21bn) as at December-end.
The purchase price is subject to adjustments based on the net asset value and assets under management of the business as at completion of the transaction.
The transaction is in line with one of DBS’ strategic priorities to be a leading wealth manager in Asia and will significantly increase the scale of its wealth management business, boosting DBS’ high net worth assets under management by more than 20%, the Singapore-based bank said in a statement.
Piyush Gupta, chief executive of DBS, said: “We believe that acquiring Societe Generale’s private banking franchise in Asia will strengthen our wealth management value proposition and further entrench our position as a leading bank in this region.”
DBS will fund the purchase price out of its internal cash resources. The transaction is not expected to have a material impact on DBS’ capital position or its earnings or net asset value per share, said the bank that has operations in 17 countries and regions across Asia including Singapore, China, Indonesia and India.
According to reports, ABN Amro was also among the lead contenders in bidding for the SGPB Asia business.
Synergies
DBS, which is Southeast Asia’s biggest bank by assets, said DBS Private Bank and SGPB Asia were highly complementary in terms of clients, geographical coverage, as well as product and service offerings.
The transaction will also provide significant revenue synergies, the company said, as SGPB Asia’s clients will, as a result of the deal, have access to DBS’s universal banking platform. The cost synergies are seen as coming from the pooling of infrastructure, information technology and other support services.
Through a memorandum of understanding, DBS’ clients will have access to Société Générale Private Banking’s offering in Europe as well as Société Générale’s corporate and investment banking products.
In addition, Société Générale’s clients will have access to DBS Private Bank’s product range in Asia, including retail, corporate and investment banking, the two banks said in separate statements.
“The transaction will create value for high net worth customers from both banks and present employees with expanded career development opportunities. It is expected to be earnings accretive one year after completion, and we look forward to working closely with Société Générale to ensure a seamless integration,” Gupta of DBS said.
The transaction is expected to be completed during the fourth quarter of the year, subject to approvals from the relevant authorities, the banks said.
Jean-François Mazaud, head of Société Générale Private Banking, said DBS had proven to be “the most suitable choice” as a buyer for its business.
Structured as a business transfer, on completion of the transaction, France-based Société Générale group will receive $220m for the franchise, which it said would also enable it to free up around $200m of equity.
The Asian private banking landscape has witnessed similar deals in recent years. In 2009, for example, ING Group sold its private banking unit to Overseas Chinese Banking Corporation, while three years later, Bank of America agreed to sell its private banking unit in Asia to Julius Baer Group.
SG committed to Asia
Société Générale stressed in its statement today that it remains committed to Asia, in spite of its decision to sell off its private banking unit there, citing its continuing presence in corporate and investment banking.
In Asia Pacific, the Société Générale Group is present in 11 countries: Japan, Hong Kong, India, Singapore, Taiwan, China, Australia, Malaysia, Indonesia, Vietnam, and South Korea.
