The Dutch bank ABN Amro is to sell its private banking operations in Hong Kong, Singapore and Dubai totalling $20bn in assets under management to LGT, the two groups announced in separate statements on Tuesday.
ABN Amro said it will focus on the private banking business in Northwest Europe and it expects “a substantial book gain” from the sale, although the amount was not disclosed.
LGT, owned by Princely House of Liechtenstein, will see its AUM boosted to $40bn in Asia and $160bn overall. ABN Amro’s business “has been profitable throughout the cycles and offers strong potential for further long-term growth”, LGT said in the statement.
Julius Baer and DBS were also the bidders, Bloomberg reported. The deal is expected to complete in the second quarter of next year.
Asia inflection point
Union Bancaire Privée’s private banking Asia CEO Michael Blake told FSA in an email reply that he believes the consolidation trend will continue.
“The industry is at an inflection point where it is necessary for banks to demonstrate commitment to the region and be clear about core strengths. We are already seeing much greater differentiation within the industry, with universal, regional and boutique banks offering a more distinct proposition to clients.
“Private banks that are in the `squeezed middle’ –- those for whom wealth management is a small or non-strategic part of their overall business — will remain under pressure as financial institutions refocus on core business lines and markets,” Blake added.
UBP bought Coutts’ wealth management operations in Hong Kong and Singapore in March 2015 and completed acquisition in April this year.
Blake said “those who remain committed and relevant to clients during the current period of consolidation will emerge stronger”.
Private bank turmoil
Mark Wightman, EY’s Singapore-based partner for wealth and management advisory, cited a different business landscape in Asia from Europe, high costs and tough regulatory environment, as the reasons for more “rationalisation” of private banks in Asia over the coming year, FSA reported earlier.
Prior to this transaction, ANZ sold its Asian wealth management and retail units for a loss to DBS in October. Singapore-based DBS, the largest bank in Southeast Asia, also bought the private banking activities of Societe Generale in Singapore and Hong Kong in 2014.
DZ Privatbank, also in October, shut its branch in Singapore and referred its clients to Bank of Singapore with no financial exchange, according to a BOS statement.
BOS said recently that it completed its acquisition of Barclay’s wealth and investment management businesses in Singapore and Hong Kong.
Nevertheless, Falcon Private Bank and BSI Private Bank were forced to close down by the Monetary Authority of Singapore after investigations found links to the scandal-ridden 1 Malaysia Development Bhd (1MDB).