DBS Bank chief joins Temasek exodus

John Burton
Financial Times

The head of DBS Bank, south-east Asia’s largest financial group, on Monday announced his surprise resignation, becoming the third senior financial executive to depart in the past week from posts linked with Temasek, the Singapore state investment company.

DBS, whose biggest shareholder is Temasek, said Jackson Tai, a US-born banker, would step down towards the end of the year to spend more time with his family in the US.

DBS denied that the resignation was because of the bank’s recent disclosure that it had one of the largest exposures among Asian financial institutions to collateralised debt obligations that included US subprime debt.

Shares in DBS have fallen more than 7 per cent this year against gains of 15 per cent and 12 per cent, respectively, for local rivals OCBC and UOB.

Mr Tai’s resignation followed Temasek’s announcement last week that Jimmy Phoon, its chief investment officer since December, was leaving to “spend more time with his family”.

Meanwhile, the resignations of Frank Tang and Terry Hu, who headed Temasek’s China investment operations, were announced in order that they could set up a China-focused private equity fund.

Although the departures appear unrelated, it represents the biggest shake-up in the Temasek-linked financial sector in the past five years and followed a previous house cleaning in 2002 after Ho Ching, the wife of Singapore’s prime minister, took over as head of Temasek.

DBS said it would conduct a global search for a new chief executive, whose two previous occupants were also foreigners.

Koh Boon Hwee, DBS chairman, will take an active management oversight role with immediate effect, the bank said.

Mr Tai, who became chief executive in 2002, is credited with restoring stability to DBS after the brief two-year reign of Philippe Paillart, who was criticised for overpaying for Hong Kong’s Dao Heng Bank in 2001 in a S$10bn deal.

Mr Tai joined the bank in 1999 as chief financial officer.

But he was seen as failing to expand DBS operations in Asia.

There were abortive bids for China’s Guangdong Development Bank and South Korea’s Korea Exchange Bank.

DBS is also expected to reduce its stake in Thailand’s TMB Bank under a recapitalisation plan that would make ING, the Dutch financial group, the Thai bank’s largest shareholder.

Analysts said that a shareholder furore over the Dao Heng deal made DBS cautious in making new acquisitions.

This has left Temasek assuming the lead role among Singapore financial institutions in buying stakes in regional banks, including Bank of China, China Construction Bank, Indonesia’s BII and Danamon Banks, and Standard Chartered.

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