OCBC to acquire $6.6b HSBC Indonesia wealth, retail banking business

The deal is expected to lift its Indonesian unit’s AUM by about 25%.

Oversea-Chinese Banking Corporation Limited’s (OCBC) Indonesian subsidiary has agreed to acquire the retail banking and wealth management assets and liabilities of PT Bank HSBC Indonesia.

In a statement, the bank said PT Bank OCBC NISP Tbk (OCBC Indonesia) entered the agreement on 4 May to take over HSBC Indonesia’s International Wealth and Premier Banking (IWPB) business.

The transaction involves the transfer of IWPB Indonesia’s assets and liabilities to OCBC Indonesia.

The assets under management (AUM) to be transferred total about $6.6b (Rp89.8t), including $4.3b in customer investments such as mutual funds, bonds and insurance products, and $2.3b in deposits.

A small customer retail loan book of $300m  (Rp3.6t) will also be transferred.

Meanwhile, total consideration will be based on the net asset value of the business at completion, plus a premium of up to about $480m, subject to adjustments.

The final amount will be determined upon completion, OCBC said.

The valuation was agreed on a willing-buyer, willing-seller basis, taking into account IWPB Indonesia’s business prospects and potential synergies to be realised by OCBC Indonesia.

“This acquisition in Indonesia fits well into our Next Frontier strategy under the Franchise Shift of building up our Indonesia franchise,“ Tan Teck Long, Group CEO of OCBC, said.

HSBC Indonesia’s IWPB platform serves about 336,000 customers across 261 branches and is amongst the larger foreign-owned retail banking and wealth management operations in the country.

The deal is expected to increase OCBC Indonesia’s AUM by about 25% and lift credit card balances by over 150% after completion.

The transaction will be funded internally by the subsidiary and is not expected to have a material impact on OCBC’s net tangible assets, earnings per share, or capital.

($1 = Rp13,635.95)