The transaction will be structured as a two-way business transfer through which SocGén’s clients will gain access to DBS’s private banking offering in Asia, going some way to retaining its credibility as a global player by remaining visible in the fastest-growing market.
In addition, DBS’s clients will have access to SocGén’s private banking offering in Europe as well as to corporate and investment banking solutions – putting DBS on a global map, extending its established pan-Asia reach.
Setting a new course
The deal is subject to adjustment based on net asset value and assets under management at completion in the fourth quarter this year – and frees up around $200 million of equity for SocGén.
As private banks struggle to turn a profit in Asia – where the average cost-to-income ratio is more than 80% and most wealth is held in non-investible assets – more commercial partnerships such as this are to be expected.
However, onlookers say the deal is underwhelming. DBS inherits just $12.6 billion in assets from the deal – slim pickings in Asia. And Singapore’s private bankers say the deal will not be a game-changer for DBS in the way OCBC’s acquisition of ING’s Asia Private Bank was.
The deal will, however, go some way to placing DBS on a global map by bringing its brand into Europe.
The local Asian banks have been beneficiaries of Asia’s wealth boom by capturing the rising wealth from their retail clients. Where they still struggle, though, is competing against the global players, which have the span to engage with clients of a net worth that requires global solutions. This deal, therefore, gives DBS leverage with its clients.
As for SocGén, it at least gets to keep its relationship with its Asia private bank, although $220 million is hardly worth shouting about.
In a press release on Monday, SocGén said the private banking business “will be in a position to free up investment capacities to accelerate its development in its core markets and to further strengthen the services offered to its clients in Europe, Latin America, the Middle East and Africa”.