Temasek Holdings

DBS chief executive sets sights high in watershed year for Asia

PUBLISHED : Tuesday, 09 February, 2010, 12:00am
UPDATED : Tuesday, 09 February, 2010, 12:00am

DBS Group Holdings' new chief executive Piyush Gupta believes he has taken the reins of one of the world's strongest banks in what could be a watershed year for Asia.

'This is Asia's time,' the Indian-born Gupta said, adding DBS economists project that domestic Asian consumption will be the biggest contributor to the global economy for the first time in history.

'In 1989, for every dollar a US consumer spent the Asian consumer counted for 50 cents. This year, Asian consumers will be contributing 102 cents for every 100 cents,' he said.

Positioning itself as a pan-Asian bank, Gupta said DBS is in an extremely strong position to take advantage of opportunities in Asia.

'We are one of the strongest banks in the world, we're very liquid and well capitalised ... many of the recommendations coming from the Bank of International Settlements, like the Basel III proposals, are aimed at raising capital levels for banks. DBS does not need to do this.'

As of December, the Singaporean bank's total capital adequacy ratio and core tier-1 capital adequacy ratio stood at 16.7 per cent and 13.1 per cent, respectively.

Ninety days into the job, Gupta - who had been at Citi across a range of positions in Asia since 1982 - said he initially had doubts about moving to an Asian institution, having spent most of his career at an American financial giant.

Some of his reservations stemmed from DBS' close ties to Singapore Inc, but he said the government connection has actually worked in its favour as customers see the sovereign backing as a mark of strength, especially during a recession. Temasek Holdings, the Singaporean sovereign wealth fund, has a 28 per cent stake in DBS.

Gupta said the fact that almost half of DBS' shareholders are based in the US or Europe shows that ownership is sufficiently diversified.

DBS, whose Hong Kong unit reported a 14 per cent increase in full-year profit last week, will push to expand its market share in the local small and medium enterprises market. Gupta said DBS needs to 'segment the market better' to recognise that different sized businesses have different borrowing needs.

The bank, which operates in eight mainland cities, also hopes to expand its share of the Chinese loan market, but concedes there are difficulties in obtaining loan funding on the mainland. It may consider yuan-bond issuances as a source of funding.

Gupta wants DBS to have a presence in 15 or so cities in China, but said this would take about five to seven years.