DBS GROUP Holdings has pulled out of the race to buy ING's private banking unit in Asia because it does not want to pay a premium for the business, sources say, while OCBC Bank has confirmed that it is still in the running.

DBS let its bid lapse and pulled out of the deal a few weeks ago, the sources add.

When contacted, a DBS spokesman said: 'As a policy, we do not comment on market rumours and speculation on our merger and acquisition activities.

'DBS' priority is to pursue organic growth opportunities which extend our Asia banking franchise. In any inorganic initiative we pursue, we always adopt a disciplined approach and will only do the deal if it fits our strategic initiatives and return on investment requirements.'

Last week, ING agreed to sell its Swiss assets to private bank Julius Baer for 520 million Swiss francs (S$711 million), as it tries to raise money to pay back its bailout money to the Dutch government. The Asian assets are on the table for about US$1 billion (S$1.4 billion), reports say.

A source close to DBS Bank said the bank did not feel it was appropriate to pay a premium for the assets as it is already a larger player than ING in this space.

Consultancy Calamander Capital has ranked DBS at No. 6 in the Asia-Pacific in terms of assets compared with ING, which is at No. 14.

OCBC Bank is believed to be smaller in terms of assets.

Yesterday, OCBC confirmed that it was keen on bidding for the assets, after recent media speculation over its interest.

It said that 'it is in discussions with ING in relation to a possible acquisition. The discussions are consistent with the bank's strategy of looking for growth opportunities in the region'.

According to Reuters, DBS' departure leaves HSBC as one of the front runners bidding for the Asian assets.

LEE SU SHYAN