Australia's CBA has signaled it intention to expand into Asia's booming private banking and wealth management business. It has just announced the acquisition of Swan & Co Wealth Management from Singapore's Kim Eng Securities. The price is undisclosed.
The Singapore-based business is four years old and was majority-owned by Kim Eng, and 20% held by Khing Go and Cliff Go, the two principals. The business has mostly focused on Indonesia and has targeted very rich families.
Swan & Co followed an open architecture approach and under CBA will continue to do so. However, it was felt that a key benefit of the deal would be the addition of CBA's banking license. Indeed, CBA has 11 branches in Jakarta under the brand PT Bank Commonwealth.
CBA has proven very successful in onshore private banking in Australia in the past two years, and has run a private client franchise in Asia that caters to expat Australians and those Asians with a connection to Australia. This business, which is run out of Hong Kong and Singapore, has been based around multicurrency mortgage lending, deposit-taking and the sale of Eurobonds.
"We've been looking at expanding our private banking in Asia," says Stephen Holden, Asian regional general manager of CBA. "We had the choice to grow organically, or via the right sort of acquisition. This deal has allowed us to leapfrog into a more meaningful private banking presence."
The two principals, Khing Go and Cliff Go, have deep experience in the private banking sphere. They are, in fact, cousins and have worked for Lehman Brothers and Prudential Bache, and first met Holden a couple of years ago. The idea of a deal was discussed then, but CBA was not yet ready. A more concrete discussion got underway at the end of last year.
"We are a good partner for them," notes Holden. "They wanted to have a bank behind them and we plan to give them the freedom to grow the business. It will continue to be based out of Singapore, but our eventual hope is it can expand into North Asia through a Hong Kong office."
Swan & Co currently has $500 million of assets under management and 11 staff.
