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OCBC to rival DBS in private banking with Barclays deal as industry consolidates

Afterwinning 's private banking business intwo Asia-Pacific financial hubs, Singapore-based Oversea-ChineseBanking Corp. Ltd.is set to trail its only bigger domestic rival more closely than ever in thetop league of wealth managers in a consolidating market.

OCBC,the second-largest Singaporean bank by assets, said April 7 that its whollyowned private banking unit, , agreed to 's wealth managementoperations in Singapore and Hong Kong for about US$320 million. The business hasmore than 1,800 clients and managed about US$18.3 billion of assets at 2015-end.

Basedon AUM data for Dec. 31, 2015, released by AsianPrivate Banker the day before the deal announcement, the acquisition willelevate Bank ofSingapore by fourspots in the Asian asset manager rankings, to right below No. 6 , the biggest Singaporeanlender. At the end of the 2015, Bank of Singapore was ranked 11th, with US$55 billion in AUM, compared to US$75billion for the competing business of DBS, which moved up one notch from a yearearlier, according to the data.

Thedeal comes as the Asian Private Bankerdata showsprivate banking AUM in Asia shrank for the first time in three years in 2015.The number of relationship managers also fell. Industry consolidation played a role in the declines afterfour mergers emerged in as many years, not counting the OCBC deal, the publicationsaid.

Accordingto Reuters, the final round of bidding forBarclays' wealth management business in Hong Kong and Singapore was narrowed toDBS and OCBC, both of which have expanded their private banking operationsthrough acquisitions.

DBSbought the Asianprivate bankingunit ofSociété Générale SAin 2014. OCBCacquired a similar business from in 2010 and folded itinto Bank of Singapore.

Whilesavings in administrative costs are a prime reason for acquisitions, retaining staffand clients after takeovers is a key challenge, said Tom King, Asia editor forfinews.asia, whichtracks the wealthmanagementindustry.

"Keeping the relationship managers and clients is crucial togrowing business. That makes it interesting to see Singapore firms adoptingthis acquisition strategy while bigger players at the global level look toexpand staff," he said.

Amonglarger rivals of DBS and OCBC, Credit SuisseGroup AG,which has the third-largest private bank in Asia, according to the Asian Private Banker data, ramped up headcount for thebusiness in Asia in 2015, with CEO Tidjane Thiam pledgingto allocate moreresources to the region. It boosted the number of private banking relationshipmanagers in Asia by 13.5% in 2015 from the prior year, the most among the top10 firms, according to the data.