People Moves

BEST OF 2012 SO FAR: DBS Set For International Foray This Year, Says Wealth COO

Tara Loader Wilkinson Editor Asia 2 August 2012

BEST OF 2012 SO FAR: DBS Set For International Foray This Year, Says Wealth COO

Editor's note: This item, which was an exclusive when it first ran on 5 March, is being republished during the August holiday season as we hope that some of our most popular and commented-upon pieces for the year so far should get a second airing at this time of year. 

DBS Bank, Southeast Asia’s largest lender, will kick-start a major international private banking expansion this year, and has hired five industry executives to spearhead growth in EMEA, WealthBriefingAsia, has exclusively revealed.

In a landmark departure from the 44-year old bank’s Asia-centric strategy, DBS Private Bank will drive its presence overseas with plans to grow its foreign assets under management by a factor of five, Olivier Crespin, chief operating officer at DBS Private Bank, told the publication during an interview at its Singapore headquarters.

The international client base currently comprises around 2-3 per cent of the private bank’s $40 billion of assets under management, equating to less than a billion, said Crespin. Within five years Crespin wants to swell this to around $5 billion, in line with bold growth projections for the rest of the franchise. Overall the bank wants to grow wealth management assets to $51 billion by 2014, according to an interview with this publication last year.

“We have always been focused on Asian clients but we now we have some interest in looking at clients from Europe, Middle East and Africa and Latin America who are keen to invest in Asia's growth,” he said.

The new hires will be based in Singapore, covering their respective markets remotely. The first members of the the new international team recently started. James Tan was hired from Switzerland's Credit Suisse in November, where he spent seven years, most recently as senior vice president of investment consulting. Yann Mocellin joined last month from multi-family office Swiss-Asia Financial Services, where he was a member of the executive management team. Both will cover the EMEA region. The bank has also hired an EMEA head and identified two more EMEA senior relationship managers who will come on board around May, said Crespin.

Bucking the trend

The international expansion moves against the current trend, as global banks increasingly turn their sights towards Asia. Now from a strong position in the East, DBS is looking West. 

The new focus was spurred by a need from its clients. "The clients we are looking for are typically sophisticated international investors with assets in Europe or US who want to have a bank account in Asia for their business, investments and products in the region. They want alternative access to currencies and Asian stocks, they are familiar with Asia and they want the connectivity throughout their accounts," said Crespin.

How will the firm achieve this ambitious growth? Unlike its peers in the region, Julius Baer and Australia and New Zealand Banking Group for example, it is not seeking acquisitions. Nor does it want to embark on transformational hiring sprees. “We are very cautious and more focused on increasing productivity and quality than getting lots of new hires. Top relationship managers who are looking for the same thing as their clients - safety - are approaching us. We don’t make big recruitment sprees, but then traditionally we rarely make redundancies.”

Headhunters in Singapore say DBS is one of the quietest banks in the market, rarely actively seeking new candidates or signing recruitment mandates. They do most of their hiring sporadically and internally, say industry sources. 

Like many of its peers in Asia, margins are still comparatively thin. DBS invested heavily in recent months on infrastructure including new offices and technology, implementing the new Avaloq software system for its private bank in 2010 and opening a number of branches across Asia, including a representative office in Taiwan. Its cost-to-income ratio was an eye-watering plus 90 in 2010, and has since dropped to around 75. This is one area where the bank can improve, said Crespin. 

However it has a strong front foot. In its full-year 2011 results posted last month, DBS saw net earnings for the year to December 2011 up 15 per cent from the previous year to S$3.04 billion ($2.4 billion), the first time earnings crossed the S$3 billion mark, propelling its total income to a new high of S$7.63 billion. 

Flight to safety

Singapore’s AAA credit rating combined with DBS' AA- rating – ranking it as one of the world's safest banks – is valuable in attracting new clients, said Crespin. Last year DBS was crowned Asia’s safest bank for the third consecutive year, in the Global Finance 20th annual ranking. It has the highest rating of all the Singaporean lenders, a draw for wary individuals, he said. 

"Particularly for European clients, our appeal is a combination of safety and exposure to the Asia growth story. The fallout from the eurozone problems and the global financial crisis means clients increasingly want to diversify. Asia is the growth engine of the world – people are placing bets here.” As for Latin America, he says the region is exporting increasing amounts to Asia and trade links create an obvious interest there.

The new global reach will change the bank’s fundamental model, bringing it in line with new, larger competitors. But Crespin is not fazed about the prospect of new rivals. “We are not looking too much at competitors at the moment, we are just trying to grow assets under management. We have a pretty unique kind of presence and we are not obsessed with it... what we are doing is getting results.”

He said the shortage of good talent in the region does make hiring more difficult, but as competitors trim staff numbers DBS' "slow and steady" approach is also a draw for the best bankers. Wealth manager headcount currently numbers around 450-strong and the firm is seeking opportunistic growth.

Nomura analysts are upbeat on the bank’s prospects. “DBS’ well-balanced growth strategy should continue to deliver relative outperformance in our view,” said analysts in Singapore last week.

Asia still key

Will the international push mean Asia - which Crespin refers to as “our back yard” - is becoming less of a focus? “Not at all, most of our client base is and will remain here,” he said. He added that the bank is still moving towards its goal to be the leading wealth manager in Asia, where GDP growth is higher than anywhere else in the world and 366 millionaires were created each day between 2006 and 2009, according to Merrill Lynch and Capgemini. 

The bank launched an ambitious pan-Asia private banking push in 2010, spearheaded by the newly-instated wealth management head, Tan Su Shan. The focus is on regional wealth management, SME, treasury, markets and global transaction services, and will see around S$250 million invested over the next five years. 

Tan was behind the launch of the new category DBS Treasures Private Client, which targets new millionaires with assets over S$1.5 million. This was part of her so-called wealth continuum (a way of involving clients right from the start of their wealth to the end, through retail banking to private banking) and Crespin said it has improved the productivity of relationship managers “immensely”.

The bank’s China franchise has shown particularly strong growth in recent months. Full-year net profit for the region crossed the RMB500 million ($79 million) mark for the first time on a 65 per cent jump in revenues year-on-year.

Last month three senior executives were brought on board for the Greater China private banking division. These included Yvonne Hsin, as head of the private banking business in North Asia, from China Construction Bank; Robert Kung, as head of private bank for DBS China, from Credit Suisse Clariden Leu Asset Management, and John Lim as a team head of the private bank for DBS Bank Hong Kong, from South China Group. 

DBS opened eight new branches in China last year, bringing its total network in the country to 25 outlets. Expansion efforts led the bank to acquire around 16,000 new clients and increase staff numbers by 42 per cent; it is eyeing headcount growth of a further 25 per cent this year. China deposits were up 40 per cent from the previous year. It now has over 200 branches across 15 markets in Asia, and is still in growth mode.

So what is the overall plan? “We are in the top ten in Asia and we want to keep growing,” said Crespin. “Our ambition is simple: to be closer to the top five.”

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