February 08, 2012, 9:17 AM EST
By Sanat Vallikappen
(Adds analysts’ estimates in third paragraph.)
Feb. 8 (Bloomberg) — Piyush Gupta, arch executive officer of DBS Group Holdings Ltd., Southeast Asia’s largest bank, picked banking over a passion for bird-watching 3 decades ago. Now his skeleton for informal enlargement are holding flight.
Gupta, who assimilated a Singapore-based lender in 2009 after a 27-year career during Citigroup Inc., is positioning DBS to take advantage of rising resources in Asia and to revoke faith on a home market.
The change in plan has delivered distinction of some-more than S$700 million ($560 million) in 4 of a final 5 quarters, a turn final reached in mid-2004. Fourth-quarter formula will be announced Feb. 10, with analysts presaging net income of S$704 million, a normal of 7 estimates gathered by Bloomberg.
“Over a past year and a half, we can see that DBS has turn a most some-more enterprising organization,” pronounced Yasmin Krishan, a patron executive who specializes in a financial courtesy during EMA Partners, a London-based executive hunt firm. “Before, they were regarded as a awkward giant. You never suspicion of DBS as this sparkling place.”
Gupta, 52, has focused on building DBS’s wealth-management business to strech abounding Asians, quite in China, India and Indonesia. He has hired new management, introduced products including Chinese yuan-denominated investments and affianced to spend S$250 million to enhance over a subsequent 5 years. He also set a 2013 aim for a bank of 12 percent lapse on equity, that was 10.8 percent in a third entertain of final year.
Paying Off
The bid is essential off. Revenue in China for a initial 9 months of 2011 rose 47 percent from a year earlier, helped by a squeeze of Royal Bank of Scotland Group Plc’s retail-and commercial-banking business in a country. It was adult 35 percent in Indonesia, 34 percent in India and 18 percent in Taiwan. Fee income from resources supervision jumped 58 percent.
Gupta also spent a final dual years “putting a basis into place,” he told a Foreign Correspondents’ Association in Singapore in November. That meant standardizing supervision processes and strengthening record and infrastructure. It enclosed improving operations during a Hong Kong unit, a former Dao Heng Bank Group Ltd. acquired in 2001 for $5.4 billion.
“When we took a low demeanour during a business, it seemed to me that we had never put in place a plumbing or a design compulsory to run a multinational company,” he said.
Uniform Practices
Before Gupta took over during DBS, managers didn’t know either a bend or a patron was profitable, and they lacked uniform practices, Gupta said. He cited an instance of an worker who, to infer a point, ran a credit concentration by a systems in Hong Kong and Singapore. It was authorized in Hong Kong and declined in Singapore.
Gupta pronounced he found distinguished differences from a procedures, patron concentration and information systems during Citigroup, notwithstanding a New York-based bank’s $45 billion supervision bailout in 2008. Gupta, who grew adult in New Delhi and warranted a Master’s of Business Administration from a Indian Institute of Management in Ahmedabad, assimilated Citigroup in 1982, rising to conduct a Southeast Asia, Australia and New Zealand operations.
“There’s no doubt that a vast partial of what we schooled during Citi is what we’re perplexing to exercise during DBS,” Gupta pronounced in an talk in November.
He set about slicing turnaround time for credit applications and new accounts, cutting wait times during a DBS call core and creation branches and ATMs some-more efficient.
“He’s been a pointy executor,” pronounced Sachin Nikhare, a Singapore-based banking researcher during IIFL Capital Pte.
Corporate Banking
Gupta pronounced he wants DBS to be seen as a clever actor in corporate banking in Asia, including in trade financing, money supervision and book services.
“We wish to pierce from being a loan house, and we were heavily a loan house, to being a diversified corporate bank,” Gupta said.
Gupta is seeking to reduce Singapore’s grant to a bank’s sum income to 40 percent from 60 percent in 5 years by flourishing faster abroad than during home. Greater China and south and Southeast Asia would any comment for 30 percent, DBS said. For a initial 9 months of 2011, income from Singapore was 62 percent of a total, unvaried from a year earlier.
At a media eventuality in October, Gupta pronounced a bank will continue to build a Singapore consumer franchise, that it hereditary when it bought Singapore’s Post Office Savings Bank and a auxiliary Credit POSB Pte in 1998.
Government Stake
DBS was determined in 1968 as a government-controlled expansion bank to coax Singapore’s automation 3 years after a country’s founding. Temasek Holdings Pte, a state-owned investment company, controls 27 percent of a bank. Peter Seah Lim Huat, authority of DBS, is a member of Temasek’s advisory panel. Temasek Deputy Chairman Kwa Chong Seng sits on a house of DBS.
Gupta pronounced DBS was a internal blurb bank until a finish of a 1990s, run mostly by people seconded from a government. DBS afterwards over from this by employing CEOs with deal-making knowledge or investment-banking backgrounds, he said.
From a early 2000s, DBS was run “almost some-more as an investment bank than a blurb bank,” pronounced Matthew Smith, an researcher during Macquarie Capital Securities Singapore Pte.
When DBS hired Gupta’s predecessor, Richard Stanley, who ran Citigroup in China, a bank touted his deal-making skills. Stanley, who died in Apr 2009 after being diagnosed with leukemia, had transposed Jackson Tai, who assimilated from New York- formed JPMorgan Chase Co., where he was a handling executive in a investment-banking division.
Gupta was allocated for his “strategic, nonetheless detail- oriented” approach, according to a recover announcing his appointment in Sep 2009.
Lack of Boundaries
Gupta has kept income from investment banking during a same turn as his predecessors — it was 2.7 percent in a initial 9 months of 2011, a same as in 2007 — even as deal-making and capital-raising has declined given a 2007 peak.
A miss of “boundaries” underneath his predecessors meant a bank finished adult with a lot of “hobby businesses” in a Middle East, Britain and a U.S., Gupta said. DBS had to write down some-more than S$1 billion in 2009 for nonperforming corporate loans in these areas as it incited a courtesy to Asia operations.
Revenue from what DBS calls a rest of a universe forsaken to 3.6 percent for a initial 9 months of 2011 from 5.1 percent during a finish of 2009.
Clear Vision
Like his predecessors, “Piyush also has ambitions of being a informal bank, though what he has finished differently is that he has clearly articulated a vision, quantified it and has been a pointy executor,” pronounced Nikhare of IIFL Securities. “While others would say, ‘We wish to be a informal bank with a vast Asia presence,’ he has firstly acknowledged, ‘We are a Singaporean bank with a informal presence.’”
DBS pronounced in Nov 2010 it was aiming for “double- digit” commission expansion in a wealth-management business annually from rising markets over a subsequent few years, and to boost managed resources to $50 billion over 3 years. Managed resources grew $2 billion to $37 billion by a finish of November, according to DBS.
To assistance strech a goal, DBS hired Su Shan Tan from Morgan Stanley to conduct a private banking section in 2010 and started a special business section final year for clients with investable resources of during slightest S$1.5 million, a apart tier from a bank’s services for people with some-more than S$5 million to invest. The lender also ran a initial promotion debate in Hong Kong and Singapore directed during rich depositors final year.
Getting Aggressive
“The private bank is removing really aggressive,” pronounced Krishan of EMA Partners. “They’re recruiting. They’re entrance adult with products. They’re doing a lot some-more in that space.”
DBS’s private bank ranked 10th by resources in Asia in 2010, according to a Private Banker International survey, forward of Bank of Singapore, a private-banking arm of Oversea-Chinese Banking Corp. Asia’s tip 3 resources managers were UBS AG, Citigroup and HSBC Holdings Plc, according to a survey.
Asia-Pacific millionaires outnumbered those in Europe for a initial time in 2010, according to a consult by Capgemini SA and Bank of America Corp.’s Merrill Lynch Global Wealth Management. Asia’s 3.3 million high-net-worth people had $10.8 trillion in resources compared with a $10.2 trillion amassed by their 3.1 million counterparts in Europe, according to a news published final June.
Before today, DBS had risen 1 percent in Singapore trade given Gupta took over on Nov. 9, 2009, while a benchmark Straits Times Index has gained 11 percent. Rivals United Overseas Bank Ltd. and Oversea-Chinese Banking mislaid 1.3 percent and gained 10 percent, respectively. OCBC has a incomparable participation in some-more essential loan markets such as Malaysia and Indonesia. DBS rose 0.4 percent to S$13.57 as of 11:33 a.m. in Singapore.
‘Extremely Energetic’
“One reason for a underperformance of DBS is where we are in a interest-rate cycle, and DBS’s incomparable participation in low-margin markets such as Singapore, Hong Kong and Taiwan,” pronounced Macquarie’s Smith, who has a neutral rating on DBS. “If seductiveness rates were to rise, DBS could be a biggest beneficiary, aided by their low-cost appropriation bottom in Singapore.”
People who know Gupta contend he has what it takes to strech a goals he has set for a bank.
“Whatever he puts his mind to, he does it well,” pronounced Krishan of EMA Partners, who has famous Gupta given a 1986 cruise tour with a organisation of friends in Mumbai including her to-be father who was a Citibank co-worker of Gupta’s. “Even outward of a bank, he is an intensely enterprising person, really creative. He writes communication — fun, humorous, smart stuff.”
While still posterior his passions for communication and bird- watching, Gupta suggested a 2011 graduating category during a National University of Singapore to find a veteran job as well.
“Going by life with ‘bird-watcher’ on my visiting card,” he said, “just didn’t seem like a defensible option.”
–Editors: Lars Klemming, Sheridan Prasso
To hit a contributor on this story: Sanat Vallikappen in Singapore during vallikappen@bloomberg.net
To hit a editor obliged for this story: Chitra Somayaji during csomayaji@bloomberg.net
Tags: Singapore