SINGAPORE -- Oversea-Chinese Banking Corp., Singapore's second-largest bank by assets, has launched private banking in Indonesia in a bid to expand its market share in Asia's wealth management industry.
The bank announced Monday that local subsidiary OCBC NISP has obtained regulatory approval to establish the private-banking unit, which will provide services for high-net-worth Indonesians with assets of more than $1 million.
OCBC has hired an industry veteran with more than 20 years of experience to lead the team managing the business. The team will also include four other private bankers, averaging 18 years of experience each. The Singapore-based lender declined to give additional information about the bankers, but said the team is expected to double in size by year-end.
The president director of Jakarta-based OCBC NISP, Parwati Surjaudaja, noted that the successful completion of the government's tax amnesty program has created "many new opportunities in the high-net-worth segment for local Indonesian banks."
The local unit was able to tap into new business opportunities in Indonesia's wealth management market when it was appointed as a gateway bank in September 2016 to receive and manage repatriated funds under Indonesia's tax amnesty program. As a way to boost tax revenues, Indonesia last July introduced a tax amnesty system to encourage wealthy people to declare their undeclared assets. Under the program, criminal charges and back taxes are waived.
OCBC noted that Indonesia has been steadily contributing to its group earnings over the past few years. The Indonesia market accounted for 5% of the group's profit before taxes in 2016 at 226 million Singapore dollars ($163 million), compared with 2% in 2010.
The Singapore bank has been aggressively expanding its share of Asia's wealth management market to take advantage of the sector's growth in the region. Last year, it completed an acquisition of Barclays' Asian private-banking business for about $227.5 million. It also said earlier this month that it's buying National Australia Bank's wealth management business in Singapore and Hong Kong.