We are not going to fight with local banks: Tan Su Shan

Tan Su Shan, managing director and group head of consumer banking and wealth management at DBS is very bullish on the Indian market. The Singapore banking major is aiming to make the most of the booming India-Singapore business corridor. In an interview with Samie Modak, Su Shan said that DBS doesn’t intend to fight with local banks and wants to just focus on what it’s best at.

While DBS set up its retail banking operations in India as early as 1994, it has been actively doing this business only since 2009. What was the reson for the reluctance and more importantly why is DBS now focused on retail banking in India?

Sanjeev (Bhasin) joined the bank five years ago. Under his leadership, we really looked at this (Indian) market with vigour. Our group CEO Piyush Gupta is from India and he knows this market very well. The new leadership that come on board with Piyush in 2009 has seized the moment. The Indian market might see some volatility in the short term but in the longer term we remain very bullish. A lot of NRIs we do business with have expressed interest in putting money in India. DBS has an edge as the India-Singapore business corridor is very strong. A lot of Indians have made Singapore their second home. On that basis, DBS can play a very strong role.
In India, most foreign banks have found it difficult to operate retail banking business profitably. In recent years, lenders like Barclays and Royal Bank of Scotland have exited the business. What strategy have you adopted to conduct retail banking business profitably in India?

I think what is important is the staying power and strategy. India is a very big market. We are never going to be like a local bank in terms of branch presence. The idea is to do what you are good at. We are going to focus on customers that are on the India, Singapore corridor. Despite the weakening of the rupee, every year there are thousand of Indian visitors to Singapore.

What is going to be your product offering?

We want to play to our strengths. We are not going to fight with the local banks. We want to supplement our lack of physical presence with digital presence. We have a good online platform and we are further refining that. Our strength is that we give really good deposit rates. For NRIs who want to come here, it is 9%. Interest rates are high here, so for you it’s not big deal but offshore it’s wow. We are not in the credit card game, but we give very good rebate on debit cards. We have got products that offer 8% post tax IRR (internal rate of return). They are good solid wealth management products, some top of range stuff that we can offer to the local HNI (high networth individuals) market and NRIs.

When would DBS India break even? Any growth targets that you’ve set?

I am hoping in the next year or so. If we get our productivity targets next year, I think we have a high chance. It’s up to the management team to do it. Growth targets set are in double digits and I think we can easily achieve it.

Will you be open to set up a subsidiary in India if the Reserve Bank of India (RBI) makes it mandatory? Are you facing any regulatory impediments in India?

We would be interested (in setting a subsidiary). We will focus on corporate banking, building SME capabilities. We will focus on the emerging affluent segment. The demographics are very encouraging. I will be honest I haven’t felt the impediments here were that great. There is so much to do onshore that it is enough for us to keep busy. With the recent
FCNR move, I think the direction is that they are welcoming a lot more FCNR flows. The world is moving towards free trade. The regulations will be tight for banks but that’s for different reasons.

What’s going to be the strategy for tapping the affluent class?

You have to be part of client’s wealth creation process. In case of all our clients, their business and personal wealth is inextricably linked, mostly the privately held companies. Therefore we are offering a package of financial solutions with wealth management solutions. In Asia, the wealth is very new. They have made a lot of money in the last 10 years. They are very rich in asset but are cash poor. So wealth management solutions cannot just say that I just want your money. In Asia part of the solution is financing, offering liquidity.

If you need to raise liquidity, Indian rates are too high. You have to look at the most optimal rate. We have done debt issuances in Singapore dollars for big Indian companies. Similarly, we have done Indian REITs. We have done securitisation and provided liquidity. We plan to roll out a mortage programme soon.

In times like this when banks are not lending, having a second alternative for funding is not a bad option and Singapore provides that. We are very excited with the Asian middle class.


Thursday, October 31st, 2013 EN

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