OCBC

OCBC is acquiring Barclays’s wealth management business in S'pore and HK at an indicative price of US$320m.

-At price/AUM of 1.75%, the transaction is reasonably priced as it is in line with previous private banking deals.
-the Barclays's entities combined AUM is US$18.3b - will elevate OCBC's Bank of Singapore to 7th largest private bank in Asia with AUM of US$73.3b, from 11th place previously in 2015 (DBS ranked at 6th).
-OCBC's 2016 net profit estimated to increase by 1.2%, CET1 ratio to fall by 45bps to 11%, leaving little room for growth.
-Recent events such as the Panama leaks and US tax authority's attempt to overrule S'pore banking secrecy law create overhang on the industry.

Maybank KE reiterates its Sell rating and TP of $7.20 on OCBC - premise on slowing income growth for Singapore banks, while NPLs are vulnerable to O&G and China exposure.