Barclays' private wealth business could generate net profits of SGD43m for winning bidder

Provided that there are not bad debts.

Barclays is selling its USD20b private banking assets in Singapore and Hong Kong.

Maybank Kim Eng notes that a transaction price of USD300m implies 1.5% Price/AUM, below the 1.75% paid by DBS for Societe Generale’s Asian private-banking business in 2014 and 5.8% paid by OCBC for ING’s Asia Private Bank. "If any of the Singapore banks succeeds in bagging the deal, we reckon that its AUM can shoot up considerably by 3 to 4 ranks."

"Based on our back-of-the-envelope calculations using AUM from Barclays’ Singapore and Hong Kong private wealth units and purchase consideration of USD300m (the actual consideration can be higher), we estimate that the business can generate an additional SGD43m of net profits for the purchasing bank assuming there are no bad debts. This can bump up its profits by 1-1.4%," adds Maybank Kim Eng.

It was previously reported that DBS and OCBC are the top bidders for this deal.

Photo from Barclays' website