Singapore’s DBS picks Citi’s SE Asia head as CEO

September 2, 2009
Singapore Democrats

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Reuters

Singapore’s DBS Group, Southeast Asia’s biggest lender, has named Citigroup’s Southeast Asia head Piyush Gupta as its new chief executive to drive its growth in India and elsewhere in Asia.

DBS, which has struggled to grow outside Singapore and Hong Kong, is keen to expand across Asia at time when the region is recovering from an economic slump and the financial crisis is forcing foreign banks to scale back.

“Given Piyush’s experience in ASEAN and Asia, we would not be surprised if there is a renewed focus on DBS’ domestic operations and potential regional opportunities, especially in Indonesia and India,” said Kar Weng Loo, a banking analyst at Bank of America-Merrill Lynch, who has a buy rating on the stock.

The decision to appoint Gupta, 49, who oversees Southeast Asia and the Pacific for Citi, was unexpected after analysts had speculated DBS might choose an insider for the post.

Citi bankers were traditionally more experienced in consumer banking and the move “could signal a focus towards retail banking,” said Raymond Tang, chief investment officer at CIMB-Principal Asset Management in Kuala Lumpur, who owns DBS shares.

The appointment came nearly five months after DBS’s previous CEO Richard Stanley died of cancer and after the bank saw a rise in bad debts in its second quarter.

Analysts are more optimistic about its outlook, citing its ability to take advantage of an economic recovery because of its strong corporate and investment banking business.

Gupta, who has been with Citi for 27 years, will join DBS in November. Stanley had also joined DBS from Citi.

“This appointment should remove a key overhang for the stock in the near term and should prove to be a catalyst,” said Harsh Wardhan Modi, a banking analyst at JPMorgan.

DBS shares rose as much as 2.7 percent and closed 0.6 percent higher in a broader market .FTSTI up 0.1 percent. The stock has risen 52 percent this year, slightly outperforming a 47 percent rise in the benchmark Singapore index.

Gupta, an Indian who has spent 20 years in Southeast Asia and Hong Kong, may be able to help DBS expand in India, where the Singapore bank has 10 branches and is seeking permission to open eight more.

His experiences in his home country have not all been smooth sailing, however.

Gupta left Citigroup in 2000 at the height of the dotcom bubble to head a firm called go4i.com, which subsequently folded despite backing from India’s Birla family, which runs the Hindustan Times, and the private equity arm of Chase Manhattan Bank.

DBS, 28 percent-owned by state investor Temasek Holdings, currently earns 90 percent of its profits from Singapore and Hong Kong.

“We are confident he will help to strengthen our franchise and grow our footprint in Asia,” said DBS Chairman Koh Boon Hwee, who has been running the bank this year.

Gupta’s appointment is subject to regulatory approval, DBS said.

Citi, which has been badly hit by the financial crisis, has lost many high profile bankers in recent months. In June, Mastercard hired Citi’s Asia head Ajay Banga.

“While it is not unusual for Citi bankers to be sought after for leadership positions in other organisations, we are fortunate that Citi has a particularly deep bench of senior talent both in Asia and around the world,” said Shirish Apte, Citi’s CEO for the Asia-Pacific.

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