ABN Amro said to explore sale of Asia private-banking business

[SINGAPORE] ABN Amro Group NV, the state-controlled Dutch lender that returned to the stock market last year, is exploring a sale of its Asia private-banking business, people with knowledge of the matter said.

The bank is working with a financial adviser and has reached out to potential buyers to gauge their interest, according to the people. The deliberations are at an early stage, and there's no certainty they will result in a deal, the people said, asking not to be identified as the information is private.

Foreign banks including Barclays Plc and Societe Generale SA have sold wealth management operations in Asia to local competitors as the ranks of the region's wealthy expand.

ABN Amro is the 18th largest private bank in Asia, with US$19 billion of assets under management in the region, according to a 2015 ranking by Asian Private Banker.

"This is a competitive market, and the middle of the market is hollowing out," Keith Pogson, senior partner for Asia Pacific financial services at Ernst & Young LLP, said by e-mail Friday. "The issue here is really whether you have the scale to cover the costs that you need to carry."

Eighty of the world's 500 richest people hail from Asia Pacific, and their combined fortunes rose 8.9 per cent this year to US$786.8 billion, according to the Bloomberg Billionaires Index. Outside Europe, ABN Amro's private-banking business has offices in Hong Kong, Singapore and Dubai, its website shows.

Brigitte Seegers, a spokeswoman for ABN Amro, declined to comment.

Oversea-Chinese Banking Corp, South-east Asia's second-largest lender, agreed in April to buy the Asia wealth and investment-management business of Barclays for about US$320 million.

Royal Bank of Scotland Group Plc sold its Coutts International private-banking business to Switzerland's Union Bancaire Privee last year, while Societe Generale sold its Asian private-banking business to DBS Group Holdings Ltd for US$220 million in 2014.

ABN Amro is implementing 200 million euros (S$306.7 million) of cost cuts as increasing competition, regulatory pressures and low interest rates have hurt earnings since the firm returned to the stock market.

Under government ownership, ABN Amro became a consumer lender primarily focused on the Netherlands.

Bank of Singapore Ltd, OCBC's private-banking arm, said last year there will be more consolidation in the Asian wealth management sector as smaller players find it harder to offer the range of services demanded by the region's rich.

Its CEO, Bahren Shaari, said wealth managers with less than US$20 billion under management in Asia may find it hard to sustain their operations.

BLOOMBERG