DBS Bank Ltd (DBS) announced today that it has agreed to acquire the wealth management and retail banking business of ANZ in five markets for approximately SGD 110 million above book value.
The portfolio of businesses being acquired is in Singapore, Hong Kong, China, Taiwan and Indonesia, representing total deposits of SGD 17 billion, loans of SGD 11 billion, investment AUM of SGD 6.5 billion and total revenue of SGD 825 million for FY2016. They serve about 1.3 million customers, of which over 100,000 are affluent/ private wealth customers and 1.2 million are retail customers.
This transaction makes strategic sense for the following reasons:
Over the past five years, DBS has consistently grown its wealth management business and is today among the top five private banks in Asia. With the acquisition, DBS will add SGD 23 billion in wealth AUM to its books, with high net worth clients accounting for SGD 6 billion. This will take DBS’ high net worth AUM and total wealth AUM to SGD 115 billion and SGD 182 billion respectively.
The acquisition will also add a large customer franchise to DBS in Indonesia and Taiwan, which are key markets for the bank. In Indonesia, DBS will gain about 410,000 customers, effectively increasing its base by six times. In Taiwan, DBS will add around 530,000 customers, expanding its base by 2.5 times. A significant portion of these are credit card customers. With a larger scale in both markets, the bank will be able to fast-track the build-out of its digital strategy.
DBS expects the transaction to create significant value for the bank. With its scale in the five markets, it will be able to bolt on the ANZ business to its existing platform, and benefit from efficiencies especially in technology and branch distribution. The transaction is expected to be ROE and earnings accretive one year after completion.
Said Tan Su Shan, Group Head of Consumer Banking & Wealth Management of DBS, “Over the years, 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. This acquisition will further cement our leadership position. It also gives ANZ’s wealth customers access to more tailored solutions and a full suite of universal banking products supported by Asian insights, research and investment advice. At the same time, the
transaction provides us with a significant consumer platform in Indonesia and Taiwan that will enable us to more quickly build out our digital agenda.”
Said David Hisco, ANZ Group Executive Asia Retail and Wealth, “Having built up a strong retail banking and wealth management franchise in Asia over the years, it was important for us to find a buyer that could take the business to the next level for customers. DBS is the best choice – its Singapore pedigree, strong Asian footprint, commitment to Asia and financial strength were key for us. This transaction represents a great opportunity for our customers and the majority of our staff in the region to fully benefit from a progressive and dynamic bank.”
Transaction Terms and Funding
The transaction is not expected to have a material impact on DBS’ capital position, earnings or net asset value per share this year. The acquisition of the businesses in each jurisdiction is independent of each other. Subject to obtaining regulatory approvals, the transaction is anticipated to be completed progressively from 2Q2017 onwards, and the target is for full completion in all markets by early 2018.