Who will take the reins at DBS?

BUSINESS COMMENT

Christie Loh
deputy business editor
christie@mediacorp.com.sg

HE WAS chief executive for just nine months, but the late Mr Richard Stanley has left behind a big pair of shoes to fill.

The affable American was clearly well-liked by all who met him. On the business front, he set in motion major initiatives — which had both positive and negative effects on the DBS' image. Initiatives that will demand follow-through action from his successor.

What could make a significant difference, is whether the new CEO is promoted from within the ranks or handpicked from outside, not just the company, but the country.

In late 2007, when DBS was looking for someone to replace Mr Jackson Tai, it mounted a five-month global search. Market talk at the time centred around a few names including Mr Stanley; Mr Francis Rozario, chief of Fullerton Financial Holdings, a unit of Temasek Holdings; and Mr Mike DeNoma, who was then group executive director at Standard Chartered.

This time round, the list could be longer and more illustrious. The reason is simple: Hundreds of bankers in the United States and Europe have been displaced by the financial crisis and crackdown on bonuses. The industry's crème de la crème — not just the "second-tier" talent – is hungry for a job.

What an opportunity for DBS, which wants to enlarge its pan-Asian presence — especially in Greater China — beyond being South-east Asia's biggest bank.

But what a challenge, too. Anyone coming from outside DBS — or outside Singapore, for that matter — will have to quickly grasp why the company, which started out as the nation's bank, is quite unlike many of its peers.

The public's outrage over the soured structured products sold by the bank and the decision to axe 900 jobs at one go last year clearly showed that DBS is held to certain non-commercial, social standards. It's regarded as "the people's bank", not least because it owns POSB, the icon of low-cost banking services for Singaporeans.

Mr Stanley, who has a Singaporean wife, scored many brownie points when he admitted last year that the POSB brand had long been neglected and would be rejuvenated. Brief though his tenure was, the ex-Citibanker was proof of the ability of a foreigner from cut-throat financial circles to taste success at DBS.

But what about promoting someone from within the ranks to head the bank?

Undoubtedly, an insider would already be familiar with the corporate culture and would not need an adjustment period.

One name thrown up during the last search — and bandied about again — is Ms Jeanette Wong, who was DBS' chief financial officer before moving last October to head the institutional banking group and international operations. She has been with DBS since 2003.

Then, there is respected banking veteran Euleen Goh, who joined DBS' board as non-executive director last December. She is a member of DBS' nominating committee tasked with succession planning.

But as the board had not found an insider suitable to take up the mantle of leadership the last time, it would have to provide compelling reasons for changing its mind within a year.

DBS has said it will reveal succession plans "in due course" and analysts like CIMBGK Research head Song Seng Wun are not expecting any rush. "Now is about coping with the recession more than trying anything new," said Mr Song, who feels the news of Mr Stanley's demise is unlikely to rattle DBS stock when trading begins today.

Plus, DBS chairman Koh Boon Hwee — despite wearing many other corporate hats — has been coping well in leading the bank with senior management. "The next six to nine months is probably something that they can cope with," said Mr Song.

But economic conditions could shift in the months ahead; leaders of the United States and China, have recently spoken of signs of improvement. No business wants to miss the recovery — and running for months without a full-time CEO could prove costly.

From TODAY, Business - Monday, 13-April-2009