DBS - DBS's RBS China buy is small but positive: JPMorgan

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD
Research House: JP Morgan Chase

DBS’ (D05.SG) acquisition of RBS’ China assets is a small but positive transaction which involves the right geography and is part of the Singapore bank’s strategy to generate 30% of group revenue from Greater China, says JPMorgan, which has an Overweight call and a $18.00 target.

“We expect DBS to differentiate itself from the past on two aspects: good execution of plans and passing over unsuitable and costly M&A deals. Hence, we believe DBS could shape up as one of the biggest turnarounds amongst Asian banks in 2011.”

DBS is acquiring RBS’ retail and commercial banking business in Shanghai, Beijing and Shenzhen for an undisclosed amount, giving it up to 25,000 RBS customers. The deal is expected to be completed within 6 months. Shares are down 0.3% at $13.98, tracking the broad market pullback (the STI is down 0.8%). Support is at the November low of $13.70.