ABN Amro Said to Weigh Sale of Asia Private-Banking Businessby and
Bank said to have contacted potential buyers to gauge interest
Deliberations are at an early stage and no certainty on deal
ABN Amro Group NV, the state-controlled Dutch lender that returned to the stock market last year, is exploring a sale of its Asia private-banking business, people with knowledge of the matter said.
The bank is working with a financial adviser and has reached out to potential buyers to gauge their interest, according to the people. The deliberations are at an early stage, and there’s no certainty they will result in a deal, the people said, asking not to be identified as the information is private.
Foreign lenders including Barclays Plc and Societe Generale SA have sold wealth management operations in Asia to local competitors as the ranks of the region’s wealthy expand. ABN Amro is the 18th-largest private bank in Asia, with $19 billion of assets under management in the region, according to a 2015 ranking by Asian Private Banker.
“The cost to the banks is climbing fast, and some players may just decide to focus back on their more profitable core business,” said Sean Kang, a Singapore-based director for Asia-Pacific wealth management at consulting firm McLagan. “Scale is key in the private banking industry, and you should continue to see consolidation in this space.”
Eighty of the world’s 500 richest people hail from Asia Pacific, and their combined fortunes rose 8.9 percent this year to $786.8 billion, according to the Bloomberg Billionaires Index. Outside Europe, ABN Amro’s private-banking operations have offices in Hong Kong, Singapore and Dubai, its website shows.
Brigitte Seegers, a spokeswoman for ABN Amro, declined to comment.
Oversea-Chinese Banking Corp., Southeast Asia’s second-largest lender, agreed in April to buy the Asia wealth and investment-management business of Barclays for about $320 million. Royal Bank of Scotland Group Plc sold its Coutts International private-banking operations to Switzerland’s Union Bancaire Privee last year, while Societe Generale sold its Asian private-banking business to DBS Group Holdings Ltd. for $220 million in 2014.
“This is a competitive market, and the middle of the market is hollowing out,” Keith Pogson, senior partner for Asia Pacific financial services at Ernst & Young LLP, said by e-mail Friday. “Many are refocusing on how you make money in Asia in private banking.”
ABN Amro is implementing 200 million euros ($224 million) of cost cuts as increasing competition, regulatory pressures and low interest rates have hurt earnings since the firm returned to the stock market. Under government ownership, ABN Amro became a consumer lender primarily focused on the Netherlands.
Bank of Singapore Ltd., OCBC’s private-banking arm, said last year there will be more consolidation in wealth management in the region as smaller players find it harder to offer the range of services demanded by the rich. Its CEO, Bahren Shaari, said wealth managers with less than $20 billion under management in Asia may find it hard to sustain their operations.