DBS’s Piyush Gupta |Replicating a success story
Four years into Piyush Gupta’s tenure, DBS is growing in many markets while building on existing businesses and increasing branches in others
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In 2009, Singapore-based DBS Bank Ltd, southeast Asia’s largest lender, took a double gamble. At that time, DBS Bank was a machine that was creaking, its operations were hurting and the global financial crisis that had begun the previous year was playing itself through. The bank had just posted its biggest profit drop in three years.
The first gamble was to repeat a strategy it tried 15 months earlier, by poaching its new chief executive from rival Citigroup Inc., a bank that was the cultural opposite of DBS’s Asian style of banking. The other gamble was hiring Piyush Gupta, who became the first Indian-born chief executive in Singapore Inc.
Gupta was asked to replicate his success at Citigroup with DBS, which was struggling at the time with structurally low growth and returns despite having a huge amount of capital. In Gupta’s own words, being DBS chief executive is “a high-profile job”. It is the “people’s bank” with 4.5 million of Singapore’s five million residents banking with it and the country’s post office savings also being controlled by it.
“About 90% of Singaporeans are invested in us in a very real way and this makes our job very complex. Singapore has a sense of ownership for this company—so anybody who leads DBS will have a high-profile job,” said Gupta, 53 this year, who has a Bachelor’s degree in economics from St. Stephen’s college in Delhi and an MBA from the Indian Institute of Management-Ahmedabad.
He also credits the exposure he received during his 27-year banking career with Citigroup, where he rose to head its operations across 11 countries, for his success with DBS. “While at Citi, I was one of the few bankers in the region to have done everything—consumer, retail, mortgages, treasury and others, and this is helpful as you can connect the dots across businesses,” Gupta said.
Four years into his tenure, DBS Bank is on its way to becoming an Asian bank, and is gunning for expansion in several markets while building on its existing business and increasing branches in others.
A record S$3.8 billion profit last year and a 29% jump in its share price during this period, along with DBS replacing Singapore Airlines Ltd as the city state’s most valuable brand, resulted in Gupta’s compensation being enhanced to S$9.3 million for the year ended March, exceeding what his peers in global banks such as Deutsche Bank AG and Barclays Plc. took home.
Under Gupta, DBS has successfully positioned itself as an Asian bank, differentiating itself from both global and local banks.
As Gupta puts it, “When you put global and local bank together, it gives us the capacity to create something that rests in the middle. We believe we have the product expertise and product breadth all over the globe, and because of our Asian heritage and roots, we operate like a local bank and are not scared of using balance sheets.”
DBS scores over global banks like Citigroup in Asia as its business strategy allows it to make money on some products and take a hit on some others, Gupta explained.
“It is very tough to do that in a global bank that is product-driven, where every product wants to make money. For us, you win some and lose some, and we have the capacity to create the best of both worlds,” he said.
For Gupta, running DBS also required a change in the fundamental philosophy of banking that he had practised at Citigroup.
“We drive what we call an Asian style of banking and define it in relationships—we tend to stay through cycles. We had a tremendous boost after the 2008 crisis because we were one of the few banks that stayed through the crisis,” he said, while adding that long-term relationships with customers and clients created a scenario where the company would not make money every time and also lose a few times.
Gupta has also hit roadblocks, the most recent being his failed S$8.3 billion for Indonesia’s PT Bank Danamon. In August, Gupta said the failure to execute southeast Asia’s biggest bank takeover had set back his ambitions in Indonesia by about five years. Besides, it also pegs back DBS’s strategy of diversifying out of Singapore and Hong Kong, which contributed 83% of its profit in 2012.
On his expansion plans, Gupta says the chances of finding good acquisitions “that makes economic sense in the countries where it wants to grow” are limited, forcing it to pursue an organic growth strategy.
As a general rule, the financial sector grows at twice the pace of nominal gross domestic product (GDP), he said, adding: “Nominal GDP growth in Asia will be 8-10% and the financial sector will grow at 16-20% and as long as we can do this, we can build a good organic strategy. For us, the inorganic strategy is opportunistic.”
His legacy at DBS Bank extends beyond its businesses to the novel human resources (HR) approaches DBS has undertaken in his tenure. Gupta has gone all out to ensure that his employees get to work across the entire spectrum of banking services, a major factor that led to his successful stint at Citigroup.
DBS hires 80-90 management associates every year and its programme is crafted to push a majority of them to different parts of the bank. “We have lost only one person in the last three years, which is quite abnormal given the turnover rates of the younger generation. So, obviously, there are people out there who like this model of building careers like this,” he said.
The bank has lost only three executives in the last three years from the 105 high potential leaders it had identified.
Unlike Citigroup, which tried many programmes to promote gender diversity, Gupta insists that the culture at DBS had always made it an attractive place for women executives. He wants to emulate K.V. Kamath’s efforts at ICICI Bank Ltd in building women leaders.
“I make a lot of effort around talent, but I don’t have to be women-focused here. One-third of my senior leadership team is women and many of my big businesses are run by women—consumer and wealth—and my CFO (chief financial officer) is a woman—we have very powerful women in DBS. In India, Kamath had the right thing going—the ICICI women were all business leaders—they are CEOs (chief executive officers) today,” he said.
Gupta is not concerned about the negative press India has been getting, of late, globally. “Negative press on India is primarily driven by the macroeconomic and governance deficit that is deserved,” he said.
The DBS chief executive is confident of the bank’s future as it can ride on the opportunities presented by a rising Asia over the next decade. “The overall demand for services in Asia is going to be so huge in the next decade that if you are a good bank with a willing proposition then you can succeed,” Gupta said.
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