United Overseas Bank's (SGX:U11) sale of its Chinese retail banking division will not significantly alter its financial standing, S&P Global Ratings said in a Thursday release.
The move enables the Singapore-based banking group to concentrate on its corporate banking business in China and leverage growth opportunities across Asia, according to the rating agency.
The bank's decision to divest its retail operations to Fubon Bank (China) reflects intense competition and shrinking margins in China's retail lending market, the rating agency said.
S&P estimates that the bank's retail loans and deposits accounted for only 0.5% of its total portfolio as of 2024.
Meanwhile, the acquisition will allow Fubon Bank (China) to expand its retail footprint and cross-sell wealth management products, the rating agency said.
S&P believes the acquisition will have a limited impact on Fubon Bank (China)'s credit profile, given its high strategic importance for parent Fubon Financial Holding and its ample capital buffers.
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