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OCBC launches onshore private banking in Indonesia through local unit

SINGAPORE – Oversea-Chinese Banking Corp (OCBC) has launched onshore private banking services in Indonesia through its subsidiary OCBC NISP, Singapore’s second largest lender said on Monday (May 22), further entrenching its leading position in wealth management in Asia.

SINGAPORE – Oversea-Chinese Banking Corp (OCBC) has launched onshore private banking services in Indonesia through its subsidiary OCBC NISP, Singapore’s second largest lender said on Monday (May 22), further entrenching its leading position in wealth management in Asia.

OCBC NISP, 85 per cent owned by OCBC, has obtained regulatory approval to establish the private banking unit to manage the wealth of Indonesians with assets under management (AUM) of more than US$1 million (S$1.4 million). The unit will leverage OCBC’s wealth management platform that draws on the combined product expertise of the bank and its subsidiaries - insurance products from Great Eastern Holdings, equities and bond funds from Lion Global Investors, brokerage services from OCBC Securities and private banking services from the Bank of Singapore.

Indonesia’s contribution to OCBC’s group earnings has been growing over the past few years. Last year, the market accounted for 5 per cent of the group’s profit before tax, up from 2 per cent in 2010. OCBC NISP has been outperforming the Indonesian banking industry in terms of its pre-tax profit (5-year compounded annual growth rate of 29 per cent versus the industry average of 13 per cent) and loans growth (5-year CAGR of 22 per cent versus the industry average of 18 per cent). Last September, OCBC NISP was appointed as a gateway bank authorised to receive and manage repatriated funds under Indonesia’s tax amnesty programme that concluded recently.

Ms Parwati Surjaudaja, president director of OCBC NISP, said: “There are many new opportunities in the high net worth segment for the local Indonesian banks as a result of the successful completion of the government’s tax amnesty programme. We are pleased to offer our wealthy clients alternative wealth management and investment options to help them manage their funds with the launch of our private banking business today.”

Today’s announcement comes after ratings agency Standard & Poor’s (S&P) last week raised its long-term sovereign credit ratings for Indonesia to BBB- from BB+ with a stable outlook. S&P said the upgrade reflected its assessment of reduced risks to Indonesia’s fiscal metrics, noting that “the government’s new focus on realistic budgeting has lowered the risks that budget deficits will widen significantly when government revenue disappoints.”

The upgrade helped fuelled a rally in the Jakarta Composite Index (JCI), which hit a record high of 5,874.44 today, before closing 0.7 per cent lower on profit taking at 5,749.45, Bloomberg data showed. The JCI has chalked up an 8.6 per cent gain in the year to date.

Earlier this month, OCBC said it had entered into an agreement to acquire National Australia Bank’s private wealth business in Singapore and Hong Kong, which serves a total of about 11,000 customers across the two markets. As at end-February, this business comprised a mortgage portfolio amounting to about US$1.7 billion (S$2.4 billion) worth of mainly residential mortgage loans, and a deposit portfolio of about US$3.1 billion in a mix of currencies.

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