ANZ's DBS Deal Marks Latest Retreat From Asia Wealth Management

  • Australian lender selling retail, wealth units in five markets
  • ANZ Bank says it will take A$265 million loss on deal

DBS to Buy Some ANZ Businesses

Australia & New Zealand Banking Group Ltd.’s sale of businesses in five Asian markets to DBS Group Holdings Ltd. offers the latest sign of consolidation in the region’s highly competitive wealth industry, which has already seen a retreat by European players like Barclays Plc and Societe Generale SA.

DBS will pay S$110 million ($79 million) for retail and wealth-management businesses that ANZ operates in Singapore, Hong Kong, China, Taiwan and Indonesia. The deal will add S$23 billion of wealth assets to DBS’s books, taking its total assets under management to S$182 billion, it said in a stock-exchange filing.

Like many of its competitors, DBS expanded its wealth business in recent years to profit from Asia’s burgeoning ranks of millionaires, and is now seeking to capitalize on the retreat of rivals who are under pressure to cut costs and focus on higher-returning businesses. DBS bought Societe Generale’s Asian wealth-management division in 2014 and is said to be considering a bid for ABN Amro Group NV’s private-banking business in the region.

“Times are bad but this is also when assets are cheap,” Kevin Kwek, an analyst at Sanford C. Bernstein & Co., said in an e-mailed reply to questions. “You have a situation where one man’s poison is another man’s meat.”

Earlier this year, DBS lost out to smaller Singaporean competitor Oversea-Chinese Banking Corp. in buying Barclays’s wealth and investment-management business in Asia. Bahren Shaari, the chief executive officer of OCBC’s private-banking arm last year foreshadowed more consolidation in wealth management Asia as smaller players find it harder to offer the range of services demanded by the rich.

Winning Positions

ANZ said it will take a A$265 million ($201 million) loss on the deal, which marks a major step in Chief Executive Officer Shayne Elliott’s drive to unwind his predecessor’s expansion into Asia. The bank had previously been seeking to earn as much as 30 percent of profit from outside Australia and New Zealand by 2017.

Shayne Elliott

Photographer: Anthony Kwan/Bloomberg

“Our strategic priority is to create a simpler, better capitalized, better balanced bank focused on attractive areas where we can carve out winning positions,” Elliott said in a statement to the stock exchange. ANZ will focus its resources in Asia on institutional banking, he said.

The Melbourne-based lender is still reviewing its businesses in Cambodia, Laos, Vietnam and the Philippines, Elliott said on a call with investors.

DBS shares were unchanged at S$14.90 as of 2:51 p.m. in Singapore. In Sydney, ANZ stock closed 0.8 percent higher at A$27.85.

DBS is aiming to complete the purchases from ANZ by early 2018, the bank said. The businesses being acquired have total deposits of S$17 billion, loans of S$11 billion and serve about 1.3 million customers, including 100,000 high net-worth individuals, the bank said.

The lender was ranked fifth in terms of assets under management in 2015, according to figures compiled by Private Banker International. UBS Group AG and Citigroup Inc. were ranked first and second, respectively, each with assets exceeding $200 billion.

“DBS has made significant strides in the wealth business, and recently became the first Singapore and Asian bank to break into the top five private banks in Asia-Pacific,” Tan Su Shan, the lender’s consumer banking and wealth management head, said in the statement. “This acquisition will further cement our leadership position.”

Separately, DBS, Southeast Asia’s largest lender, said Monday net income was little changed at S$1.07 billion in the three months to September from a year earlier as soaring allowances for credit and other losses offset gains from non-interest income. Provisions for soured assets jumped to S$436 million from S$178 million a year ago.

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