(May 20): Oversea-Chinese Banking Corp (OCBC) substantially outbid rivals in a recent deal to buy HSBC Holdings plc’s retail and wealth assets in Indonesia, by more than US$100 million ($128.22 million) in most cases, according to people familiar with the matter.
Only the second-highest bid was within US$100 million of OCBC’s, the people said, asking not to be identified because the information is private. The higher offer allowed OCBC to enter bilateral negotiations to finalise the deal, the people said.
Representatives of OCBC and HSBC declined to comment.
Singapore-based OCBC agreed to acquire the HSBC assets earlier this month to deepen its presence in Southeast Asia’s largest economy. The price of the transaction was calculated based on the net asset value of HSBC Indonesia’s International Wealth and Premier Banking operations and a premium of up to about $480 million, OCBC said. The difference between OCBC’s offer and others hasn’t previously been reported.
The value is subject to adjustments and will be finalised after the deal is completed, potentially in the first half of next year, pending regulatory approvals, OCBC said. The amount was decided on a “willing-buyer, willing-seller basis”, taking into account business prospects and potential synergies, according to the bank.
Other shortlisted bidders included Singaporean lenders DBS Group Holdings Ltd and United Overseas Bank Ltd, Malaysia’s CIMB Group Holdings Bhd and Japan’s Sumitomo Mitsui Financial Group Inc, people familiar with the matter have said.
See also: Keppel will divest property and rigs to offset M1 says CEO Loh
Fast-growing markets such as Indonesia have attracted banks looking to expand. OCBC has a presence in Indonesia with its Jakarta-listed subsidiary PT Bank OCBC NISP Tbk, and it has grown in the country both organically and via acquisitions, including buying Commonwealth Bank of Australia’s local unit in 2024.
The HSBC purchase will be the first by new OCBC chief executive officer Tan Teck Long, who is planning a deeper push into Asia, including in the affluent segment in Hong Kong and expanding private banking in Indonesia. As part of the deal, OCBC will offer to employ all 1,300 staff working in HSBC Indonesia’s retail banking operations, the bank said.
Analysts have so far reacted positively to the rationale of the deal. Bloomberg Intelligence analysts Sarah Jane Mahmud and Alison Hor said it will boost OCBC’s Southeast Asian franchise and strengthen profit margins and fees. It “should be modestly earnings accretive, excluding one-time integration costs”, they wrote.
See also: E-commerce giant Shein buys apparel brand Everlane, reports say
Tan has said the HSBC Indonesia assets are “a perfect fit” for OCBC’s Indonesia strategy, and the total portfolio of $6.6 billion will also accelerate the bank’s growing wealth business. The HSBC portfolio had deposits of $2.3 billion and a much smaller $300 million customer retail loan book.
Uploaded by Tham Yek Lee
