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Nomura rounds up markets’ biggest misses in 2016

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Categorized | Banks

Barclays raises less than expected from Asia wealth unit sale

Posted on November 28, 2016

Barclays has raised almost a third less than expected from the $225m sale of its wealth and investment management business in Singapore and Hong Kong to Singapore’s Oversea-Chinese Banking Corp (OCBC).

When the deal was announced in April, Barclays had indicated it could fetch $320m from selling the business, which had $18.3bn of assets under management at the end of last year and was initially valued at about $500m.

However, when its Asian wealth management clients were given the choice of whether to join OCBC, some of them decided to either stay at Barclays or to join another bank, reducing the overall price of the deal, which was fixed at 1.75 per cent of assets under management.

Jes Staley, Barclays chief executive, said: “This is another example of the great progress we have made this year in Barclays non-core, as we aim to reduce risk weighted assets to £23bn in 2017 and reintegrate the remainder of the unit back into the group.”

The bank said it remained committed to Asia, where it still has offices in Singapore, Hong Kong, China, India and Japan after cutting jobs and pulling out of several smaller markets in the region.

Barclays said the deal would reduce its risk-weighted assets by about £800m. It follows the sale of the bank’s US wealth management business and of several retail banking and credit card operations in Spain, Portugal and Italy.

Last month, the British bank called time on 150 years in Egypt by selling operations in the north African country in a $500m deal and it is in the process of selling down its 50 per cent stake in its larger South African-listed operation.

Singapore-based banks have been busy acquiring several of the Asian wealth management businesses that have been sold in recent years by foreign banks that decided to sell up having struggled to achieve sufficient scale.

ANZ Banking Group said earlier this year it was selling its wealth management and retail business in Singapore, Hong Kong and three other Asian markets to DBS, the Singapore-based bank that also bought Société Générale’s Asian private bank in 2014.

But some big western banks, such as UBS, Credit Suisse, HSBC and Standard Chartered, are still seeking to expand in Asian private banking and wealth management, betting on continued rapid growth in the number of millionaires and billionaires in the region.

DBS last year became the fifth largest private bank in the Asia-Pacific region, after UBS, Citi, Credit Suisse and HSBC, according to a ranking of assets under management for rich clients published by Private Banker International. It is the first time a Singapore bank has broken into the top five in Asian wealth management.