Singapore's DBS extends Asia private banking push with ANZ assets purchase

By Jamie Freed and Saeed Azhar

SYDNEY/SINGAPORE (Reuters) - DBS Group plans to buy Australia and New Zealand Banking Group's wealth and retail businesses in five Asian markets - part of a big private banking push for the Singapore lender and the first significant retreat from Asia for ANZ.

The businesses in Singapore, Hong Kong, China, Taiwan and Indonesia, will be sold for around S$110 million ($80 million), in a deal that underscores how smaller players are being squeezed out of private banking due to lack of scale.

"Further investments do not make sense for us given our competitive position and the returns available to ANZ," ANZ Chief Executive Shayne Elliott said in a statement.

He added that for the Australian lender to have remained competitive it would have had to invest further in developing its branch network and digital capacity.

ANZ, Australia's third-largest bank by market value, will focus on its institutional banking business in Asia, it said.

Elliott told an analysts call the bank would look to exit its retail and wealth assets in the Philippines, Vietnam, Cambodia and Laos separately.

The deal will help DBS build up its leading position in the region, said Tan Su Shan, DBS's head of consumer banking and wealth management, noting that the Singapore lender had recently broke into the top 5 bank rankings for the Asia-Pacific region.

DBS and local rival Oversea-Chinese Banking Corp have been aggressively bidding for the Western private banking assets for sale in Asia.

DBS is also weighing a bid for ABN AMRO's Asian private bank, sources have told Reuters.

The news comes as Singapore's biggest lender posted a slight increase in third-quarter net profit, in line with expectations, although bad debt provisions rose sharply due to its exposure to the troubled oil and gas sector.

ANZ said it would take a loss of A$265 million on the sale, including write-downs and added the sale was expected to increase its Tier 1 capital ratio by 15 to 20 basis points. The losses are set to be booked in the first half of the current financial year.

They will come of top of A$360 million in one-off charges that will be booked in the year just ended. Those earnings are due to released in full on Thursday.

In 2009, ANZ acquired the Royal Bank of Scotland's retail, wealth and commercial businesses in Taiwan, Singapore, Indonesia and Hong Kong as well as institutional businesses in Taiwan, the Philippines and Vietnam for $550 million.

The move was part of a "super-regional strategy" led by former ANZ Chief Executive Mike Smith, who left the bank last year.

($1 = 1.3912 Singapore dollars)

(Reporting by Jamie Freed in Sydney and Saeed Azhar in Singapore; Editing by Edwina Gibbs)