Singapore’s OCBC Bank announced that it has entered into an agreement to acquire National Australia Bank’s (NAB) Private Wealth business in Singapore and Hong Kong.
As at end February 2017, the business comprised a mortgage portfolio amounting to about US$1.7 billion (S$2.39 billion) worth of mainly residential mortgage loans, and a deposit portfolio made up of about US$3.05 billion (S$4.28 billion) worth of deposits of a mix of currencies.
The business serves a total of about 11,000 customers across the two markets, primarily from the affluent segment. The purchase consideration will be at around the book value, or net asset value, of the business at the time of completion. The consideration, arrived at on a willing buyer willing seller basis, takes into account OCBC Bank’s assessment of the value and potential of the business.
The transaction, expected to be completed before the end of the year subject to regulatory approval, is not expected to have a material impact on OCBC Bank’s capital position. The business will be earnings accretive to OCBC Bank within the first year of completion.
A copy of the agreement will be made available for inspection at OCBC Bank’s registered office for a period of three months from today.
The addition of US$1.7 billion (S$2.39 billion) of mortgage loans will increase the overall size of OCBC Bank’s mortgage portfolio by about 4 per cent, based on its mortgage loans book of S$60 billion as at end March 2017.
The mortgage portfolio that OCBC Bank is acquiring is well-supported by a broad pool of mainly residential properties with a weighted average loan-tovaluation ratio of below 60 per cent. It has had a strong track record with negligible delinquencies, reflecting its high credit quality and the affluent profile of the customers. More than half of the properties are located in Australia, the majority of which are in the major cities of Sydney, Melbourne and Brisbane.
Properties in the UK, Hong Kong, New Zealand and Singapore make up the rest of the mortgage portfolio. Financing purchases of properties outside Singapore and Hong Kong is not new to OCBC Bank. It has established a robust risk management framework to manage its financing programme for overseas properties, which started with London properties in 2010.
OCBC Bank has since expanded its overseas property financing programme to Australian cities such as Sydney, Melbourne and Perth, giving its customers a wide range of home loan solutions. OCBC Bank will immediately derive interest income from the acquired mortgage loans upon completion.
More than half of the mortgage loans are booked in Hong Kong and will be transferred to OCBC Bank’s wholly-owned subsidiary OCBC Wing Hang in Hong Kong. The remaining, booked in Singapore, will be transferred to OCBC Bank.
Source: OCBC Group