DBSDY DBS Group Holdings Ltd (PK)

Trying to tackle even pieces of such a bank 'would just completely consume us'

By Julie Steinberg 

HONG KONG -- DBS Group Holdings Ltd., Southeast Asia's largest bank by assets, isn't interested in acquiring parts or all of U.K.-based lender Standard Chartered PLC, DBS Chief Executive Officer Piyush Gupta said in an interview Wednesday.

Singapore state investment firm Temasek Holdings Pte. Ltd. owns about a 16% stake in Standard Chartered and about a 30% stake in DBS. Standard Chartered's business has focused on Asia and Africa and some investors have suggested that Temasek could push the two banks toward a merger.

"StanChart is four times our size," Mr. Gupta said. "For a bank like us to try and tackle even pieces of StanChart would just completely consume us. That's all we would do for the next three years."

A Standard Chartered spokeswoman declined to comment on Mr. Gupta's comments and on the possibility of a merger between the two banks.

As Standard Chartered's troubles mounted last year and the bank announced an overhaul to trim its sprawling operations and shore up profitability, analysts at brokerage CLSA in December suggested DBS could swoop in to make a bid if Standard Chartered's recovery foundered. DBS said at the time that there was no basis to the report.

People close to Standard Chartered have played down the possibility of combining with DBS or being taken over by a large American bank. They say such a move isn't part of the plan for Standard Chartered CEO Bill Winters, who is trying to clear out bad loans and improve returns while revamping the Asia-focused bank.

Asked whether there is pressure from Temasek to do a deal with Standard Chartered, Mr. Gupta said: "Temasek has zero say in how we run the bank. I've run the bank for 6 1/2 years and I've never had one call from Temasek about anything ever. They have nobody on my board."

A spokesman for Temasek said "as a matter of policy, Temasek doesn't provide commentary on market rumors or speculative analyst reports."

Mr. Gupta said the Singapore-based bank is focused on competing with financial technology firms that have received billions in funding in recent years. He said he considers Chinese e-commerce giant Alibaba Group Holding Ltd. his biggest competitor. Alibaba's financial-services affiliate, Ant Financial Services Group, owns and operates Alipay, the largest online payments system in China by volume.

"Alibaba has zero branches, it's got no infrastructure," he said. "Despite that today it is doing everything a bank does: it raises money, it lends money, it does payments."

Alibaba earlier this month said it would pay about $1 billion for a controlling stake in Singapore e-commerce startup Lazada Group. A spokeswoman for Ant Financial declined to comment on Mr. Gupta's remarks.

Mr. Gupta said acquiring a bank such as Standard Chartered "is fighting yesterday's battle."

"I think the battleground right now is Alibaba and digital," he said. "We just don't have the bandwidth" to acquire Standard Chartered.

Mr. Gupta said it would also be difficult from a regulatory standpoint to take over Standard Chartered because it is "massive," present in "multiple countries" and would require the buyer to "unbundle it." DBS in 2013 dropped its yearlong pursuit of PT Bank Danamon after it failed to win regulatory approval to gain majority control of Indonesia's then sixth-largest bank by assets.

Mr. Gupta joined DBS in November 2009 after serving in various roles at Citigroup Inc., including CEO for Southeast Asia, Australia and New Zealand. Since his arrival at DBS, he has sought to position the bank as a regional alternative to large international banks and smaller local players.

That has included growing the wealth management division, ramping up corporate banking and trade finance and grabbing market share from European rivals who retreated in 2011 amid the European debt crisis and again in recent months as they've retooled their strategies. In recent years, DBS has focused on China, India and Indonesia as areas of expansion.

Mr. Gupta said the bank could consider more private banking acquisitions in the future. It acquired Société Générale SA's Asian private-banking business in 2014.

Barclays PLC earlier this month agreed to sell its Asian wealth-management unit to the private-banking unit of Singapore's Oversea-Chinese Banking Corp.

"If you look at the [compensation] and remuneration profile and the culture profile, we just thought it wouldn't suit the kind of bank we are," Mr. Gupta said of the Barclays unit. Mr. Gupta said DBS "has one of the lowest staff-cost-to-revenue ratios in Asia." A spokesman for Barclays declined to comment. A spokeswoman for OCBC declined to comment.

--Margot Patrick in London contributed to this article.

Write to Julie Steinberg at julie.steinberg@wsj.com

(END) Dow Jones Newswires

April 23, 2016 02:48 ET (06:48 GMT)

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