This morning, OCBC announced that Bank of Singapore, its private banking arm, is proposing to acquire Barclays Bank Plc’s Wealth and Investment Management Business (WIM) in Singapore and Hong Kong for US$320m. This price is based on Barclays WIM Singapore and Hong Kong’s assets under management (AUM) of US$18.3b as at 31 Dec 2015.

With this acquisition, it will take Bank of Singapore’s AUM to a total of US$73.3b, or an increase of 33.3%. According to the announcement, the final purchase price will be 1.75% of the AUM transferred upon completion of the transaction, which is expected to happen at the end of this year.

This acquisition will complement its current wealth management business, especially in its key markets in Hong Kong and Singapore. We do not have a rating on OCBC. Based on Bloomberg, there are currently 16 Buys, 5 Holds and 3 Sells for the stock with a 12-month target price of S$9.33. The stock closed at S$8.72 yesterday.

Source: OCBC Research - 7 Apr 2016