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DBS to Buy Societe Generale’s Asian Private Banking Business
DBS Group Holdings Ltd. (DBS), Southeast Asia’s biggest bank, agreed to buy Societe Generale SA (GLE)’s Asian private banking business to bolster market share in a region where millionaires’ wealth may top North America this year.
The $220 million transaction includes private-banking operations in Singapore and Hong Kong as well as “selected parts” of the French bank’s trust business, Singapore-based DBS said in a statement today. The price represents about 1.75 percent of Societe Generale Private Banking Asia’s $12.6 billion of assets as of Dec. 31.
The purchase will accelerate DBS’s growth by increasing its high-net-worth assets under management by more than 20 percent, the bank said. Singapore is poised to surpass Tokyo as the Asian city with the most ultra-rich people within a decade, a report from Knight Frank LLP showed this month.
“DBS has now made it clear that this segment of the market is strategically critical for future growth,” Sebastian Dovey, managing partner of Scorpio Partnership, a London-based consultancy, wrote in an e-mail today. “It will need to recognize the investment it now must make to establish the combined entity as a credible regional force.”
The transaction, which will be funded with cash, will add to earnings one year after it’s completed, DBS said. The sale will probably close in the fourth quarter.
DBS is hoping to retain Societe Generale clients with a combined $10 billion of assets with the purchase, Tan Su Shan, the lender’s head of consumer banking and wealth management, told reporters in Singapore today.
The sale is likely to have a positive impact on Societe Generale’s net income and capital ratios as measured by Basel III standards, the Paris-based bank said in a statement.
Olivier Gougeon, chief executive officer of Societe Generale’s Asian private banking unit, will move to DBS, as will a majority of his 330 staff members, he said today at the Singapore briefing.
Following the sale, Societe Generale’s Asia clients will get access to DBS’s banking services, while DBS customers will be able to tap the French lender’s private banking and other services in Europe, the Singapore bank said.
DBS, led by Chief Executive Officer Piyush Gupta, had been competing with Dutch lender ABN Amro Group NV for Societe Generale’s Asian private banking business, with both companies making final offers in November, two people with knowledge of the matter said at the time.
The price of DBS’s purchase as a percentage of the Societe Generale unit’s assets compares with an industry average for a similar wealth-management business of 1.47 percent, according to Scorpio’s Dovey.
“We expect there was a recognition of a slight premium to this based on the brand, caliber of the personnel and the business mix,” he said. “These three factors are critical to clients.”
When Oversea-Chinese Banking Corp., DBS’s Singaporean rival, purchased ING Groep NV’s Asian private-banking business in 2009 for $1.46 billion, it paid 5.8 percent of the target’s assets under management, Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd., wrote in a report today.
DBS shares rose 1.1 percent to S$15.90 as of 4:45 p.m. in Singapore. The stock declined 4.7 percent since DBS abandoned a $6.5 billion bid to buy PT Bank Danamon Indonesia in August.
The Singaporean lender ran Asia’s ninth-largest private bank at the end of 2012 with assets of $46 billion, according to a Private Banker International study published in October. Zurich-based UBS AG topped the list, followed by Citigroup Inc., with Societe Generale ranked No. 18.
Last year, the assets managed by DBS for clients with more than S$1.5 million each climbed by 21 percent to S$69 billion ($55 billion), the bank said today.
Wealth management firms worldwide expect consolidation to accelerate amid rising pressure on profit margins and increased regulatory and tax scrutiny, PricewaterhouseCoopers LLP said a June report.
Societe Generale, France’s second-largest bank by market value, has been selling assets from Japan to North America and is eliminating jobs as it tries to boost profitability.
Wealth among Asia-Pacific millionaires may top North America’s as soon as this year as Japanese economic growth boosts investor returns in the country, according to a September report by Cap Gemini SA and Royal Bank of Canada. Asians with at least $1 million in investable assets are expected to see their riches climb to $15.9 trillion by 2015 from $12 trillion in 2012, according to the report.
Singapore will have 4,878 people with $30 million or more in assets excluding their principal residence by 2023, a 55 percent gain from last year, and trailing only London globally, Knight Frank said in a report published March 5. -Bloomberg
The $220 million transaction includes private-banking operations in Singapore and Hong Kong as well as “selected parts” of the French bank’s trust business, Singapore-based DBS said in a statement today. The price represents about 1.75 percent of Societe Generale Private Banking Asia’s $12.6 billion of assets as of Dec. 31.
The purchase will accelerate DBS’s growth by increasing its high-net-worth assets under management by more than 20 percent, the bank said. Singapore is poised to surpass Tokyo as the Asian city with the most ultra-rich people within a decade, a report from Knight Frank LLP showed this month.
“DBS has now made it clear that this segment of the market is strategically critical for future growth,” Sebastian Dovey, managing partner of Scorpio Partnership, a London-based consultancy, wrote in an e-mail today. “It will need to recognize the investment it now must make to establish the combined entity as a credible regional force.”
The transaction, which will be funded with cash, will add to earnings one year after it’s completed, DBS said. The sale will probably close in the fourth quarter.
DBS is hoping to retain Societe Generale clients with a combined $10 billion of assets with the purchase, Tan Su Shan, the lender’s head of consumer banking and wealth management, told reporters in Singapore today.
Basel III
The sale is likely to have a positive impact on Societe Generale’s net income and capital ratios as measured by Basel III standards, the Paris-based bank said in a statement.
Olivier Gougeon, chief executive officer of Societe Generale’s Asian private banking unit, will move to DBS, as will a majority of his 330 staff members, he said today at the Singapore briefing.
Following the sale, Societe Generale’s Asia clients will get access to DBS’s banking services, while DBS customers will be able to tap the French lender’s private banking and other services in Europe, the Singapore bank said.
DBS, led by Chief Executive Officer Piyush Gupta, had been competing with Dutch lender ABN Amro Group NV for Societe Generale’s Asian private banking business, with both companies making final offers in November, two people with knowledge of the matter said at the time.
Critical Factors
The price of DBS’s purchase as a percentage of the Societe Generale unit’s assets compares with an industry average for a similar wealth-management business of 1.47 percent, according to Scorpio’s Dovey.
“We expect there was a recognition of a slight premium to this based on the brand, caliber of the personnel and the business mix,” he said. “These three factors are critical to clients.”
When Oversea-Chinese Banking Corp., DBS’s Singaporean rival, purchased ING Groep NV’s Asian private-banking business in 2009 for $1.46 billion, it paid 5.8 percent of the target’s assets under management, Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd., wrote in a report today.
DBS shares rose 1.1 percent to S$15.90 as of 4:45 p.m. in Singapore. The stock declined 4.7 percent since DBS abandoned a $6.5 billion bid to buy PT Bank Danamon Indonesia in August.
More Assets
The Singaporean lender ran Asia’s ninth-largest private bank at the end of 2012 with assets of $46 billion, according to a Private Banker International study published in October. Zurich-based UBS AG topped the list, followed by Citigroup Inc., with Societe Generale ranked No. 18.
Last year, the assets managed by DBS for clients with more than S$1.5 million each climbed by 21 percent to S$69 billion ($55 billion), the bank said today.
Wealth management firms worldwide expect consolidation to accelerate amid rising pressure on profit margins and increased regulatory and tax scrutiny, PricewaterhouseCoopers LLP said a June report.
Societe Generale, France’s second-largest bank by market value, has been selling assets from Japan to North America and is eliminating jobs as it tries to boost profitability.
Wealth among Asia-Pacific millionaires may top North America’s as soon as this year as Japanese economic growth boosts investor returns in the country, according to a September report by Cap Gemini SA and Royal Bank of Canada. Asians with at least $1 million in investable assets are expected to see their riches climb to $15.9 trillion by 2015 from $12 trillion in 2012, according to the report.
Singapore will have 4,878 people with $30 million or more in assets excluding their principal residence by 2023, a 55 percent gain from last year, and trailing only London globally, Knight Frank said in a report published March 5. -Bloomberg
Top 100 Listed Companies in Singapore Stock Exchange
All figures are in SGD
Full FY2012 and FY2013 data are coming soon
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Singapore
Singapore is poised to surpass Tokyo as the Asian city with the most number of such wealthy individuals.
Private banks are pulling out the stops to woo high-net-worth individuals in Singapore. According to a recent report by Knight Frank, Singapore is poised to surpass Tokyo as the Asian city with the most number of such wealthy individuals within a decade.
SINGAPORE: Private banks are pulling out the stops to woo high-net-worth individuals in Singapore. According to a recent report by Knight Frank, Singapore is poised to surpass Tokyo as the Asian city with the most number of such wealthy individuals within a decade.
Forbes estimates that by 2017, one in every 20 Singaporeans will be a millionaire.
Amid the growing competition for such clients, industry watchers said that rising business costs and a tight labour supply makes this environment even more challenging for private banks.
UBS, the largest private bank in Asia (with approximately US$247.7 billion of assets under management) has just introduced a new product for its wealthy clients in the region, UBS Advice.
Previously only available to institutional clients, UBS Advice is a software that allows clients to obtain more timely personalised investment advice, and who at the same time, wish to maintain full decision-making power over their investments.
Their clients are high net worth individuals, with more than US$1 million in investible assets.
While it is using more technology to help clients manage their wealth, UBS said the personal touch will not be compromised.
Kathy Shih, CEO of wealth management in Asia Pacific at UBS AG, said: "It doesn't lessen the interaction because every investment idea is delivered by the client advisor to the client personally. And whatever modes they have used in the past, be it by phone or in person, it would still be the same mode of interaction.
"Markets are riskier now, they are often influenced very much by central bank policy and there are a lot of new regulations, so this is a challenging environment."
Mohit Mehrotra, executive director of Deloitte Consulting, said: "Given the nature of the private banking business, obviously a lot more customisation is required for a more advice-driven business. So it's hard to replace that physical touch with a digital play.
"But clearly there is a co-existence of both that's important to deliver the sophisticated experience to the client."
While the private banking industry in Asia continues to grow, the environment remains extremely competitive. And with the shortage of talent in the market as well as rising business costs, analysts said private banks need to find ways to reduce costs and at the same time, improve service levels and productivity.
This means private banks are exploring different kinds of propositions to boost their services and attract clients.
Mr Mehrotra added: "On the cost side of the equation, many of the banks are trying to look around client optimisation -- what are the types of client they should focus on to generate better income for the cost that they are investing in these clients."
Besides investment costs, experts said increasing costs of compliance and regulations will also add further strain to private banks' bottomline.
There are at least ten private banks in Singapore and the major players include UBS, Citibank and Credit Suisse.
- CNA/ac
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Singapore
S'pore will "face structural budget deficits unless it raises revenues in next decade"
SINGAPORE: Singapore will face structural budget deficits if it does not raise revenues in the next decade.
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam gave this warning in Parliament on Wednesday.
He said the government will have to raise revenues while maintaining Singapore's economic competitiveness and keeping a low tax burden on the middle-income.
To support the elderly and low-income families, the government is spending more on healthcare and social services.
This is expected to result in a budget deficit of S$1.2 billion for 2014 -- the country's first deficit since fiscal year 2009.
Mr Tharman said: "Revenues are not going to increase as a percentage of GDP, but spending will go up as a percentage of GDP. So we will not have the current fiscal advantage that we have, in the future. And at some point, our revenues will fall short of expenditures."
He warned that Singapore will run into structural deficits, unless it raises revenues in the next decade.
The Singapore government knows it has to raise revenues in order to pay for increased social spending.
But how will it go about doing that, given that one of its objectives is to keep the tax burden low for the middle-income?
One tax expert said that one way the government can raise revenue -- without increasing direct taxes on corporates or individuals -- is to broaden the tax base.
PricewaterhouseCoopers Tax Partner, Abhijit Ghosh, said Singapore could look at broadening the tax base by taxing investment income or capital gains.
Mr Ghosh also said that it's unlikely for the government to raise revenue by raising corporate taxes.
Singapore's corporate income tax rate - at 17 per cent - is among the lowest in the region, but it has to contend with competing jurisdictions such as the UK and Taiwan, which have or are planning to lower rates.
In his speech on Wednesday, Mr Tharman also said that there is further room to enhance asset taxes, which refers to taxes on cars and property.
He added that it's important for Singapore's tax system to remain fair and equitable. - CNA
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Singapore
Singapore Global Logistic Properties Ltd. (GLP) Agrees to Pay $1.36 Billion for Brazil Real Estate
GLP is buying 34 industrial and logistic sheds, according to a regulatory filing today by Sao Paulo-based BR Properties, which said it will use the proceeds to reduce debt. The deal depends on approval from antitrust regulators.
GLP has been investing in Brazil since 2012, when it was part of a group that spent 2.9 billion reais to acquire all the logistics facilities of the private-equity firm Hemisferio Sul Investimentos. Singapore-based GLP said at the time that it was trying to profit from Brazil’s rising consumption rates and demand for distribution facilities.
Grupo BTG Pactual (BBTG11), Latin America’s No. 1 merger adviser, is the biggest shareholder of BR Properties, according to data compiled by Bloomberg.
BR Properties rose 0.6 percent to 17.10 reais in Sao Paulo at 2:17 p.m., while GLP closed unchanged at S$2.80 in Singapore
BR Properties said the GLP transaction ends a November agreement it had signed with WTGoodman IBP Participacoes SA, a joint venture between Goodman Group and WTorre SA, which had offered to buy the properties for A$1.49 billion ($1.34 billion).
Tag :
Singapore
Singapore named world's most expensive city: Economist Intelligence Unit
Singapore is now ranked as the most expensive city in the world, according to new research published today by The Economist Intelligence Unit (EIU) in its Worldwide Cost of Living survey.
Price rises and a stronger currency mean that Singapore now has the "dubious" claim to the title of the world's most expensive city, according to the EIU report that compares the cost of living between 131 cities worldwide using New York as a base city.
Over the last decade a 40 percent currency appreciation, coupled with solid price inflation, has consistently pushed Singapore up the ranking. The city also has some structurally expensive items that skew the overall cost of living upwards. For example, car costs have very high related certificate of entitlement fees attached to them, which makes Singapore significantly more expensive than any other location when it comes to running a car.
As a result, transport costs in Singapore are almost three times higher than in New York. "Singapore's rise is partially attributable to the continued strength of the Singapore dollar, but the city has seen price rises too which have no doubt been compounded by a reliance on imports," said Jon Copestake, Editor of the report which looks at over 400 individual prices.
As a city-state with very few natural resources to speak of, Singapore is reliant on other countries for energy and water supplies, making it the third most expensive destination for utility costs. The proliferation of expensive malls and boutiques on Orchard Road also make Singapore the priciest place in the world in which to buy clothes.
Singapore's rise comes at the expense of Tokyo, traditionally the world's most expensive city, which has seen a slide in the valuation of the Yen, despite a return to inflation. The Japanese capital fell to joint 6th most expensive.
As well as Singapore and Tokyo, currency appreciation has cemented the position of Sydney (5th) and Melbourne (6th) in a top ten that is dominated by European and Asian/Australasian cities. Hong Kong is the 5th priciest city in Asia and 13th in the world. Mumbai in India offers the best value for money and is joined among the cheapest locations by South Asian cities such as New Delhi, Karachi in Pakistan and Kathmandu in Nepal. Economic instability relating to the civil war and the collapse of the Syrian pound has placed Damascus among the world's cheapest cities, although local price inflation will have been impacted by supply issues.
A summary of the full report can be downloaded at: www.eiu.com/wcol2014
Price rises and a stronger currency mean that Singapore now has the "dubious" claim to the title of the world's most expensive city, according to the EIU report that compares the cost of living between 131 cities worldwide using New York as a base city.
Over the last decade a 40 percent currency appreciation, coupled with solid price inflation, has consistently pushed Singapore up the ranking. The city also has some structurally expensive items that skew the overall cost of living upwards. For example, car costs have very high related certificate of entitlement fees attached to them, which makes Singapore significantly more expensive than any other location when it comes to running a car.
As a result, transport costs in Singapore are almost three times higher than in New York. "Singapore's rise is partially attributable to the continued strength of the Singapore dollar, but the city has seen price rises too which have no doubt been compounded by a reliance on imports," said Jon Copestake, Editor of the report which looks at over 400 individual prices.
As a city-state with very few natural resources to speak of, Singapore is reliant on other countries for energy and water supplies, making it the third most expensive destination for utility costs. The proliferation of expensive malls and boutiques on Orchard Road also make Singapore the priciest place in the world in which to buy clothes.
Singapore's rise comes at the expense of Tokyo, traditionally the world's most expensive city, which has seen a slide in the valuation of the Yen, despite a return to inflation. The Japanese capital fell to joint 6th most expensive.
As well as Singapore and Tokyo, currency appreciation has cemented the position of Sydney (5th) and Melbourne (6th) in a top ten that is dominated by European and Asian/Australasian cities. Hong Kong is the 5th priciest city in Asia and 13th in the world. Mumbai in India offers the best value for money and is joined among the cheapest locations by South Asian cities such as New Delhi, Karachi in Pakistan and Kathmandu in Nepal. Economic instability relating to the civil war and the collapse of the Syrian pound has placed Damascus among the world's cheapest cities, although local price inflation will have been impacted by supply issues.
A summary of the full report can be downloaded at: www.eiu.com/wcol2014
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Singapore
