Societe Generale picked about five suitors to study the unit’s finances after they made initial offers, said one of the people, asking not to be named because the process is confidential. Final bids are expected by the end of November, according to two people, who didn’t identify the other companies. The division oversees about $13 billion.
DBS could overtake Deutsche Bank AG (DBK) and Morgan Stanley in Asia-Pacific wealth management by buying the Societe Generale operations, based on figures from Private Banker International. While wealth in Asia has been growing at a faster pace than elsewhere, costs as a proportion of revenues for private banks are higher, studies have shown.
“Wealth is a good business to be in,” said Kevin Kwek, an analyst at Sanford C. Bernstein & Co. in Singapore. “It doesn’t seem to be a large acquisition, and this could potentially fill some geographic and segment gaps, and add breadth and depth of customers for DBS.”
Spokeswomen for DBS and Societe Generale declined to comment.
HSBC Holdings Plc, Standard Chartered Plc and Credit Suisse Group AG were among companies that submitted first-round bids for the Societe Generale unit, Reuters reported this month.
DBS runs Asia’s ninth-largest private bank, with assets under management of $46 billion at the end of 2012, according to a Private Banker International study published last week. Morgan Stanley oversaw $58 billion while Deutsche Bank managed $50 billion, the report showed.
Wealth management firms worldwide expect consolidation to accelerate amid rising pressure on profit margins and increased regulatory and tax scrutiny, PricewaterhouseCoopers LLP said in a June report. Costs as a proportion of revenue at Asia’s private banks are 14 percentage points higher than the global average, according to PwC.
Societe Generale, France’s second-largest bank by market value, has managed money for Asia’s wealthy since 1997 through offices in Singapore and Hong Kong, according to its website. The bank, led by Chief Executive Officer Frederic Oudea, is selling assets to comply with stricter capital rules designed to avoid a repeat of the 2008 global financial crisis.
Wealth among Asia-Pacific millionaires may top North America’s as soon as next year as a resurgent Japanese economy boosts investor returns in the country, a report by Cap Gemini SA and Royal Bank of Canada published Sept. 25 showed.
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