Societe Generale Said to Plan Sale of Private Bank in Asia
The Paris-based bank has reached out to possible bidders to gauge their interest, the people said, asking not to be identified as the process is private. SocGen may send financial information on the unit to potential suitors as early as this month, one person said.
Wealth management firms expect more mergers and acquisitions in their industry amid pressure on margins and increased regulatory and tax scrutiny, PricewaterhouseCoopers LLP said in June. Asia is the fastest-growing region for private banks, according to McKinsey & Co.
“There are players who would want to bulk up on their assets under management and client advisers to add scale to their business,” said Tjun Tang, head of Boston Consulting Group’s financial services practice in the Asia-Pacific region. “For others, if you’ve got no pathway to growth and profitability, then maybe it makes sense strategically to exit.”
Tang said potential acquirers include regional Asian banks or “mid- to larger-sized” international private banks, which typically manage $25 billion to $75 billion of assets.
SocGen, led in Asia by Olivier Gougeon, has serviced private-banking clients in Asia through Singapore and Hong Kong since 1997, according to its website. Societe Generale’s private banking business is active in 16 countries with about 2,500 employees.
Societe Generale spokeswoman Nathalie Boschat in Paris declined to comment. The bank’s plans to sell the unit was reported by Reuters yesterday. JPMorgan Chase & Co. (JPM) is working with SocGen on the sale, two people said.
JPMorgan advised ING Groep NV when it sold its private banking assets in Asia to Singapore’s Oversea-Chinese Banking Corp. (OCBC) for $1.46 billion in 2009. Other deals in the region include Swiss wealth manager Julius Baer Group Ltd.’s purchase of Bank of America Corp.’s Merrill Lynch wealth management units outside the U.S. for about 860 million Swiss francs ($923 million) last year, and Standard Chartered Plc’s acquisition of Morgan Stanley’s Indian wealth management assets this year.
Millionaires in Asia outside Japan will create $7 trillion in net new wealth by 2016, boosting the share of global riches from emerging markets, McKinsey said in June, based on a survey of private banks.
SocGen’s global private-banking assets under management fell to 84.5 billion euros ($112 billion) at the end of June from 87.9 billion euros three months earlier, hurt by about 600 million euros in second-quarter outflows, according to an Aug. 1 presentation on the bank’s website. Still, second-quarter profit at the unit rebounded and its revenue rose 26 percent, excluding a 9 million-euro operational loss it booked in Asia in the second quarter of 2012, it said.
The bank agreed in July to sell its Japanese private banking operations to Sumitomo Mitsui Financial Group Inc. Last year, it retreated from North America with the sale of a minority stake in Rockefeller Financial Services Inc. and its shares in Canadian Wealth Management Group Inc.
SocGen, seeking to improve profitability after reducing risk-weighted assets over the last two years, is eliminating hundreds of jobs at its Paris headquarters and it is targeting 900 million euros of cost cuts by 2015.
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