DBS 01 (May 08 - Jul 10)

[kennynah]

i seriously doubt the deceased will have any material impact on DBS

[blid2def]

i seriously doubt the deceased will have any material impact on DBS

Especially when they already had done the handover somewhat earlier this year. If this were the case that happened a while back when I think some company chairman/CEO passed away suddenly, then maybe there'd have been a kneejerk negative response. But KBH had been in place to cover for a while liao, so, I don't see why there should be a drop as a reaction to this news.

Short DBS this week when US banks announcing results these 2 weeks + stress test smoke and mirrors coming out end April? Eh... my heart not very strong... make money or lose money I also will heart attack. I won't try.

[kennynah]

watch a bit more porn.... strengthen your heart a bit...

[financecaptain]

From the blog of the editor of the Asian Banker on DBS Bank :- http://www.emmanueldaniel.com/index.php ... log&bid=98. Pretty interesting ...

I want to repeat, firstly, the comments posted in a previous blog, that when a man dies, you leave him alone and you remember all that is the best about him. I have known Richard Stanley casually since about 2002 when we kept running into each other in China. Whether or not he was the best possible choice of CEO for DBS is now a moot point. He was not in essence a personal friend, and so my assessment of him is limited to the professional arena.

But I do want to remember that in my honest view, he was in essence a good man. A very good man. He was a suitable point man for Citibank in China, taking all the hits that the regulators were throwing at the bank as it slid in the quality of its operations in that and other countries. He was an exemplary, very lucky and very happy family man. But most of all, he was a man who did the best he could in all that was given to him. So, even as I would fault DBS for having appointed him as CEO, I would not fault him for having taken the job and doing what he could.

Those who worked with him remember fondly that he needed help in being organised, but was a star in dealing with people of all nationalities and ranks. When someone like him passes away, you recognise the void immediately, the roles that only someone as pleasant as he was and no one else could have played in the scheme of things.

Which now brings me to someone who is very much alive and needs some immediate attention. Mr Koh Boon Hwee, the chairman and CEO after Richard Stanley illness was revealed early this year.

I think that the first and immediate questions that we need to ask Koh again and again until we see some clarity are:
- When exactly did you know that Richard Stanley was probably not going to make it?
- In hindsight, why were you so optimistic in your comments that Richard was going to make it, when the prognosis for acute myelogenous leukemia is usually not good?
- Was Francis Rozario ever brought into dialogue with the bank and at which stage and for what reason? Were you telling shareholders one thing, that you are holding the fort for Richard, but indeed negotiating something else – his succession - behind the scenes?

His answers to these questions are very important because now that Richard is dead, we snap our fingers and wake up from the trance we have been put into the past few months - that Koh Boon Hwee and Koh Boon Hwee alone will be the answer for DBS going forward.

We – meaning shareholders, analysts even employees – have ourselves to blame for allowing Mr Koh Boon Hwee to lead us to believe that all he was doing was holding the fort for Richard Stanley’s return.

Nobody, not the media, not the analyst, nor the shareholders at the recent annual meeting, ever pushed the SUCCESSION question. How could it be? That's how weak we are. My colleagues who attended press conferences with Mr Koh tell me that the question of succession was indeed asked in several different ways, but that every time he managed to side step it.

Why was the succession plan not put into place and if there was one, why was it not communicated? Because Mr Koh was enjoying himself too much as the undisputed CEO making all the decisions and putting all the pieces in place as he saw fit?

This is the country where the government has built an incredible reputation for being open about disruptive matters. When the current prime minister Lee Hsien Loong and a former very popular president, Mr Ong Teng Chong were diagnosed with cancer, both in 1992, the government came out very transparently, giving the public a very clear account of their conditions and led the public through their chances of survival.

When many governments around the region were mucking around with their numbers during the SARS pandemic, this is also the government that led the way in showing that dealing with the numbers in a transparent and objective manner was the best way to garner public cooperation to deal with a potential pandemic, instead of hiding away for fear of losing tourist revenue.

Most recently, as the great global crisis deepened in the region, the Singapore government was the first to come out admitting to the possible downside risks and working that into their projections. So even as people in other countries in the region were thinking that the situation in Singapore was worse than their own countries, they fell one by one themselves.

In the light of this high level of quality in dealing with the truth of any important situation of public interest, not carrying the discussion into the all-important question of succession, whether inadvertently or otherwise, brought us right back to the stone ages.

The standards of disclosure we should expect from DBS and its chairman is much higher than what we got. What we were getting these past few months were, "Don't worry, I am holding the fort as CEO while he is away. Don't worry, I am not going to change anything." Let's snap our fingers and come out of our trance - we were actually buying that!

I don’t think that many people catch on to why I am irked by the quality of Koh Boon Hwee’s words in a number of situations. I know that some people in official circles think that Mr Koh Boon Hwee is brilliant. I am sure he is, but even if he is, why should he go without scrutiny? Deep, rigorous scrutiny.

For example, he was quoted in the local newspapers as saying at the recent annual shareholders meeting that “DBS has deep management bench strength”. Nobody at that shareholders meeting had the balls to stand up and ask him, “What bench strength are you talking about, Mr Koh? You just sacked 900 of your senior-most and best managers in January.” You consider Rajan Raju bench strength?

In another remark also captured by the local amanuensis, Mr Koh Boon Hwee was quoted as saying “there will be no change in strategy while Richard Stanley is away (on sick leave).” I was not there to know the context in which he said that. But after enquiring around, my first reaction was that nobody was asking him for that assurance in the first place. In fact, if anything, it is understandable that strategy is an evolving thing, especially in the midst of a global economic crisis when nobody knows what the next step should be. By the way, they were indeed changing strategy in respect to shoring up capital, which I am sure was the result of many discussions held without Richad Stanley in the room. So what was the purpose of the assurance?

The statement reminded me of a cat’s assurances to the little lizard in his paw that nothing was going to happen to him before doing what cats do to lizards in their paw.

Mr Koh Boon Hwee bears only half the blame for this intellectual charade. The quality of enquiry in this little “intelligent” island takes the other half. Here is a man who has been given the reins of the most important financial institution in the region, and he just tells us whatever he wants and we accept them without question. We have no one else to blame.

When I think about the way in which Alan Greenspan has been able to get away by telling the world whatever gibberish he wanted (which was mostly unintelligible) during his tenure as Fed chairman, I think we have only ourselves to blame for giving him the leeway. Nobody put up their hand to ask, "I am sorry, Mr Chairman, I am stupid, but I do not understand what you mean by entrepreneurship in finance." Nobody said, "I am sorry Mr Chairman, I am really stupid, I don’t understand why hedge funds, which leverage the financial services industry 40X, should not be regulated,” or "sorry Mr Chairman, I don't understand why the Fed does not even see the reason to publish the size of the leverage and in what instruments."

Ditto Mr Koh Boon Hwee: "I am sorry, I am really stupid Mr Koh Boon Hwee. We just accepted your statements as if Richard Stanley was coming back. We were silly not to press you on the topic of succession in DBS….. you are in the sweet spot of being seen as the solution to the problem."

I heard rumours this week that the bank was already speaking to Francis Rozario. Now, Francis was one of Temasek’s original choices of CEO of DBS. In my opinion, he would have made an excellent CEO, except that from pieces of information I can put together, I was told last year that “the DBS board rejected Temasek’s choice.” So, I take a look at the DBS board, and I almost fell off my chair to see how much it had changed since the days of Jackson Tai.

To his credit, Jack had pulled together what I would call a board that appealed to the aspirational values of DBS. In other words, his board was made up of giants in different industries who had built up global businesses, and whose insights and goodwill could help DBS grow to where they came from. People who would have had no time for DBS unless he had practically begged them to become board members. I looked at the DBS board today, and in my view, it is made up of fund management sales types who, net-net, have more to gain from being directors of DBS than to give to DBS. In my world – "wanna be" quality.

So, I am guessing that now they are talking to Francis Rozario to become CEO because he is the nearest replacement in sight, unless of course they get Mike Denoma again, who was previously speaking with them when Richard got the job (easier to manage).

If indeed Francis is appointed CEO, the clash with Mr Koh Boon Hwee will be immediate. One will have to go. Since I do not think that Mr Koh, having found that cushy spot from where he can direct everything, is going to allow that, the bank will probably say that they can do without a CEO until they find the next one.

In all of these movements, we are all forgetting the long journey that DBS has gone through in trying to become a bank of some substance since 1998. I would submit that it has now completely lost the leadership it had in its own home ground. BILLIONS AFTER BILLIONS AFTER BILLIONS OF DOLLARS WASTED ALREADY.

We have forgotten the billions of dollars of mistakes: the POSB integration, the Dao Heng Bank goodwill write-off, Thai Danu Bank write-down, the Thai Military Bank fiasco, that Indian finance company that Rajan Raju messed up. The Bank of the Philippine Island sitting on the shelf. That is why the current situation that the bank is in is completely untenable.

In our annual assessment for the various awards that we give to banks, we see data that suggests that DBS market share in a number of its core businesses is eroding very quickly. It’s ROA is falling, its market share especially in Hong Kong is falling. It’s really a business without a rudder.

I see in this tragedy that is DBS, the cushy, small minded, compliant, microcosm that the Singaporean corporate scene is today. Depsite the apparent sophistication in lifestyle, there is no sophistication in inquiry. A body corporate that strains at gnats and swallow the camels dished at them wholesale. The wealth and egos are there for everyone to see, but not the clash of inquiring minds that makes for a truly world class corporate environment. A case of pearls and swine in picture perfect harmony. Is this society truly capable of anything world class? No, it is all imported.

My concern with Mr Koh Boon Hwee is his plot. What I see is a loner who has a pet idea of how businesses should be run, but who has had a lousy track record in trying to impose his world view on others in the past. I have discussed some of them previously. Yet, even at DBS he is known to spend hours and hours talking himself silly at board and management meetings - listening to his own view of the world.

For all the negative remarks that are being thrown at Ho Ching, the CEO of Temasek, today, at least I could see where her vision thing was coming from. Without saying a word, she was trying to figure out a way to build the financial services industry that could become a truly core pillar of Singapore’s economy, that could dwarf all the bells and whistles type of things, such as the casinoes and F1 rallies, that Singapore has to do these days to grow out of its current giant self.

Prior to the global economic crisis who would have known? Work towards building a truly large global financial institution by doing whatever was necessary (merge StanChart, DBS and ICICI?) that could make this tiny little island a giant financial hub that far outweighs the size of its organic economy? Now, today some would say that is dangerous – look at what happened to Switzerland. But it is a wholly unanswered question: the illness of UBS was because about 40% of its business was dabbling in financial markets, whilst a commercial banking business with no more than say 10% of its total assets in markets might have been pliable, like a giant telco company in different markets.

To be accurate, some of her core assumptions were indeed wrong. But the funny thing about the discussions on Singaporean internet chat sites on her are nothing more than a series of juvenile grunts. In countries like China or India, whenever something of significance happens, the quality of discussion is unbelievably high, productive and useful. All serious minded people can take some value out of such dialogues instead of just throwing snide, inane peripheral gossip on things like whether someone resigned before or after announcing the annual results.

In a material discussion, you can see the building of a shared knowledge base that a people can grow from, and you wished that th work put in the past seven years or so will not go in vain.

But Singapore is intellectually .... a limited... city state, where the comforts of ostensible wealth and a false sense of intellectual superiority have arrested its people – both the locals and the foreigners in it - into a dangerous smug sense of collective stupidity. When during the Lehman minibond scandal, the Monetary Authority of Singapore (MAS), caught completely flat-footed, barked at the banks to select someone, anyone, pay him and use him as an “independent” adjudicator of the complaints hurled at them by the screaming public, it struck nobody to say….wait a minute, how can someone selected and paid by the erring bank be called “independent” by any stretch of the imagination.

The point is not whether Ho Ching made mistakes that cost billions of dollars. Everyone made mistakes in this crisis, including Warren Buffet, for goodness sake. But I have not seen a single discussion on the assumptions that she was working on, how much of it can be salvaged so that we can build on what she has already achieved. For all its weaknesses, Temasek’s bench-strength is still as an investor in financial services more than any other industry. How can we build on that instead of taking on a different tack that is going to cost another many years, many more mistakes at billions of more dollars?

In the larger scheme of things, for all the negative and snide things that have been said about Ho Ching, the one thing you should respect her for is that she knew when her time was up. Nobody could have retired Ho Ching, except Ho Ching herself, and when she did that, she was saying without saying a word that “I will not kid these people, I will treat them with respect.” Then the same people comment snidely on mistakes already made and completely miss the point about what she is really all about. That is what I mean by a small minded people.

Any number of other people in leadership positions, not just in Singapore but in any number of countries, would have hung on to their positions because they would not know what else to do.

Sure, there is always the threat of the “invisible hand” that reminds us that intellectual inquiry in Singapore is a high price to pay even for those of us who care enough. But the lack of inquiry, the lack of building of a collective body of knowledge is the much, much higher price to pay that forfeits us from exactly the destination that this country wants to go.

It is this lack of enquiry that has put someone like Mr Koh Boon Hwee in his sweet spot today. Our only protection against that is to be stupid, really stupid and ask, “what were you saying again?”

[helios]

very interesting article. the author is quite opinionated and emotional in his writings ...

he is correct to say that the prognosis for AML is not good. most patients could never make it beyond 5 years.

[ichew]

yah nice article
nv crossed my mind to think from his angle
i tink sporeans, generally, had been conditioned since young to be Yes-man
mebbe the newer generations can and will be taught to speak up more confidently in school

==========

... Nobody could have retired Ho Ching, except Ho Ching herself,

mebbe her father-in-law told her gently to do so?
just teasing ....

[financecaptain]

For information, DBS's current board below. How many experienced commercial bankers are there running a commercial bank ? You would think that China will be an important strategy going forward given that it paid so much for a HK bank years ago, but the board composition does not suggest anything like that ? Seems to me many of these board members are probably buddies of the Chairperson.

1. KOH BOON HWEE
Chairman

Appointed 15 Jun 2005, Mr Koh, 58, assumed the role of Chairman of the Board of Directors of DBS Group Holdings and DBS Bank Ltd on 1 Jan 2006.

He is Executive Director of MediaRing Ltd and Chairman and Director of Sunningdale Tech Ltd. Mr Koh is also Chairman of the Board of Trustees of Nanyang Technological University, and among the other boards he serves on are Temasek Holdings (Pte) Ltd, Agilent Technologies, Inc. and the Hewlett Foundation.

Mr Koh started his career at Hewlett Packard and rose to become its Managing Director in Singapore, a post he held from 1985 to 1990. From 1991 to 2001, he was Executive Chairman of the Wuthelam Group. Mr Koh is Chairman of the Board Credit Committee and serves on the Compensation and Management Development Committee as well as Nominating and Board Risk Management Committees.

2. RICHARD DANIEL STANLEY (deceased)
Chief Executive Officer

Appointed 1 May 2008, Mr Stanley, 48, is CEO of DBS Group Holdings and DBS Bank Ltd. Prior to joining DBS, Mr Stanley was CEO of Citibank China, where he had direct responsibility for the management of Citibank's businesses, investments, strategy and infrastructure in China.

Mr Stanley serves on the boards of DBS Group Holdings and DBS Bank Ltd. He is also a Director and Vice Chairman of The Islamic Bank of Asia Limited. In addition, he is on the board of the Dr Goh Keng Swee Scholarship Fund and sits on the Seoul International Business Advisory Council. He is also a member of the Columbia Business School - Board of Overseers.

Mr Stanley is a member of the Board Credit Committee.

3. ANG KONG HUA
Director

Appointed 21 Mar 2005, Mr Ang, 65, is Executive Director of NSL Ltd. (formerly known as NatSteel Ltd) in charge of strategic matters. Prior to this, he was CEO of NSL for 28 years.

Mr Ang also serves on the boards of Yantai Raffles Shipyard Ltd and the Government of Singapore Investment Corporation. He was formerly Chairman of Singapore Telecommunications Ltd and Singapore Post Pte Ltd.

Mr Ang is Chairman of the Audit Committee and a member of the Nominating Committee.

4. BART JOSEPH BROADMAN
Director

Appointed 17 Dec 2008, Dr Broadman, 47, is Managing Director of Alphadyne Asset Management based in Singapore. Prior to forming Alphadyne, Dr Broadman spent 14 years in Asia working for J.P. Morgan, most recently as Vice Chairman of Asia and Head of Markets (Credit, Rates, and Equities) in Asia.

He is currently a Board member of the Central Provident Fund and serves on its Investment Committee. He is also Vice Chairman of the Board of Governors at the Singapore American School.

Dr Broadman is a member of the Compensation and Management Development Committee and the Board Risk Management Committee.

5. ANDREW ROBERT FOWELL BUXTON
Director

Appointed on 17 Feb 2006, Mr Buxton, 70, is a career banker, having spent 36 years at Barclays Bank Plc with his last position as Chairman from 1993 to 1999. He was President of the British Bankers Association from 1998 to 2002 and a Member of the Court of the Bank of England from 1997 to 2001.

Mr Buxton is Chairman of the Board Risk Management Committee. In addition, he also sits on the board of The Islamic Bank of Asia Limited.

6. CHRISTOPHER CHENG WAI CHEE
Director

Appointed 1 Jun 2007, Mr Cheng, 60, is the Chairman of USI Holdings Limited and Winsor Properties Holdings Limited.

Amongst several other directorships, Mr Cheng is a director of the Hong Kong Securities & Futures Commission, a member of the Hong Kong Exchange Fund Advisory Committee, the International Council of INSEAD, Yale University's President's Council on International Activities and the University of Hong Kong Council.

Mr Cheng is a member of the Audit Committee and the Compensation and Management Development Committee. In addition, he also sits on the boards of DBS Bank (China) Limited and DBS Bank (Hong Kong) Ltd.

7. EULEEN GOH YIU KIANG
Director

Appointed 1 Dec 2008, Ms Goh, 53, is currently non-executive Chairman of the Singapore International Foundation.

She is also a non-executive director of Singapore Airlines Limited and MediaCorp Pte Ltd, Chairman of the Accounting Standards Council and Adviser to the Singapore Institute of International Affairs. Ms Goh was CEO of Standard Chartered Bank, Singapore from 2001 until Mar 2006. She held various senior management positions in Standard Chartered Bank, retiring in Mar 2006 after some 21 years with the Bank.

Ms Goh is a member of the Audit Committee and the Nominating Committee.

8. KWA CHONG SENG
Director

Appointed 29 Jul 2003, Mr Kwa, 62, is Chairman and Managing Director of ExxonMobil Asia Pacific Pte Ltd and the Lead Country Manager for the ExxonMobil group of companies in Singapore.

He is also Deputy Chairman of Temasek Holdings (Pte) Ltd and a director of Sinopec SenMei (Fujian) Petroleum Company Ltd. Mr Kwa also serves on the Public Service Commission.

Mr Kwa is the Chairman of the Compensation and Management Development Committee and a member of the Board Credit Committee. In addition, he is Chairman of DBS Bank (Hong Kong) Ltd and also chairs its Board Risk Management Committee.

9. JOHN ALAN ROSS
Director

Appointed 6 Feb 2003, Mr Ross, 64, was Corporate Chief Operating Officer for the Deutsche Bank Group until his retirement in Feb 2002. Before joining Deutsche Bank in 1992, he spent 21 years at the Bank of New York, where he was last its Executive Vice President, Head of Global Asset and Liability Management.

Mr Ross is the Chairman of the Nominating Committee and a member of the Board Risk Management Committee. In addition, he sits on the board of DBS Bank (China) Limited and also chairs its Audit Committee.

10. WONG NGIT LIONG
Director

Appointed 3 May 2004, Mr Wong, 67, is the Chairman and CEO of the Venture Group of companies. In this capacity, he sits on the boards of numerous Venture companies in the region and internationally.

Mr Wong is also Chairman of the NUS Board of Trustees, and a member of the Research Innovation and Enterprise Council.

Mr Wong is a member of the Audit Committee, the Nominating Committee and Compensation and Management Development Committee.

[shaun]

I believe the fact that Koh Boon Hwee as a non-banker is telling veteran bankers how to run a bank is pissing a lot of people off. At the end of the day, the quality (or lack thereof) of the decisions made by a man will determine the outcome. As Buffett has said, having many people agreeing with you doesn't make your decisions right. Rather the facts and results will bear that out.

I tend to think that Koh Boon Hwee's qualities had been quite well tested and accepted by Temasek at least. If he is really that lacking, Temasek must be really dumb to be appointing him again and again for chairmanship positions in so many TLCs.

[winston]

You would think that China will be an important strategy going forward

I dont think any of the foreign banks will be able to do much in China..

[LenaHuat]

Hi financecaptain

I take umbrage with this post. It's hogwash. I don't see why this whole blog entry is re-copied here.