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China、India main targets of banking mergers, acquisitions
ChinaeCapital Inc.:
Merger and acquisition (M&A) activities in global private banking and wealth management industry are on the rise with China and India considered as preferred destinations, according to a new report by international consultants KPMG International.
"The growth of personal wealth in Asian economies is providing the greatest impetus to M&A activity," said KPMG in its study of trends in 2005 released Tuesday.
In 2005, global private banking and wealth management industry witnessed a record 258 deals - 80 percent more than in the previous year.
"Around 45 percent of all deals last year took place in the Asia-Pacific region and when respondents were asked to nominate countries where they were seeking to expand, China, followed by India, topped the poll," the report stated.
KPMG foresees this level of activity continuing with over 90 percent of private banks believing that there are good growth prospects for the industry over the next three years while 89 percent are "either actively seeking acquisition targets or would consider acquiring if the right opportunity arose".
The study is the third in the annual series "Hungry for More - Acquisition appetite and strategy in the global private banking and wealth management industry" and is based on interviews with 147 private banks around the world.
The survey was conducted by the Economist Intelligence Unit.
"India is one of the most preferred private banking destinations as its economy is not only growing at 8 percent per annum but is also going through a transformation to the next level of maturity," said Abizer Diwanji, head of transaction services for KPMG in India.
"This enables double digit returns on most asset classes which is not so in a majority of countries. Further robust and liquid financial markets enable exits on a timely basis to be able to realise gains. This makes India a good resource deployment avenue."
Given the emerging trend of increased earning levels and a high savings rate in India, Diwanji said: "This has resulted in a robust private banking capital raising avenue. Indian private banking capital would soon fund deployments to a significant part of our capital needs".
Summing up the report, Stuart Robertson, head of financial advisory services for KPMG in Switzerland, said: "Despite all the activity we have seen there will be considerably more consolidation in the private banking market. There is a wall of money still to hit the market."
He pointed to the fact that "almost 22 percent of respondents expect to spend more than $1 billion on acquisitions over the next three years."
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