(Bloomberg) -- ABN Amro Group NV agreed to sell its private-banking assets in Asia and the Middle East to Liechtenstein-based LGT Group, following its European rivals in shrinking overseas operations.
The unit manages about $20 billion in Singapore, Hong Kong and Dubai, representing about 10 percent of its private-banking assets globally, the Dutch bank said in a statement on Tuesday. ABN Amro said it expects a “substantial book gain” on the sale, estimated at 400 million euros ($431 million) by Kepler Cheuvreux.
ABN Amro, which returned to the stock market last year after a state rescue during the financial crisis, is refocusing on markets closer to home as the government gradually winds down its stake. The bank follows Societe Generale SA and Barclays Plc in exiting the crowded Asian international wealth management market, where fierce competition for the increasing number of millionaires is weighing on profitability.
“The deal makes sense and the price is probably in line with earlier transactions done in the region,” said Robin van den Broek, a London-based analyst with Mediobanca SpA, who has a “neutral” rating on ABN Amro shares. “They're getting some capital out of this without giving up too much in potential earnings, given the high costs for private banks in Asia in particular.”
Other Bidders
Julius Baer Group Ltd. and DBS Group Holdings Ltd. had also considered bids for the unit, which could fetch more than $300 million based on the valuations of other recent deals, people with knowledge of the matter said in October. Oversea-Chinese Banking Corp.'s purchase of Barclays's wealth units in Singapore and Hong Kong was priced at 1.75 percent of the $13 billion transferred in the deal, Singapore-based OCBC said last month.
“After a strategic review, we have decided to focus on further strengthening and growing our private-banking activities in northwest Europe,” Jeroen Rijpkema, chief executive officer of ABN Amro private banking international, said in the statement.
ABN Amro spokeswoman Brigitte Seegers declined to comment on the transaction price.
LGT, owned by the Princely House of Liechtenstein, will increase its assets under management to more than $40 billion in Asia and about $160 billion in total, it said in a separate statement. The Vaduz-based bank was the 15th-largest private bank in Asia, trailing the leader UBS Group AG's $274 billion under management, according to a 2015 ranking by Asian Private Banker.
--With assistance from Martijn van der Starre To contact the reporters on this story: Giles Broom in Geneva at gbroom@bloomberg.net, Ross Larsen in London at rlarsen2@bloomberg.net. To contact the editors responsible for this story: Elisa Martinuzzi at emartinuzzi@bloomberg.net, Cindy Roberts, Dale Crofts
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