Banking is increasingly about scale. As DBS invests to build more sophisticated financial services capabilities, it will need to seek out a larger customer base to amortize its investments. DBS is already dominant in Singapore with access to most of the population. DBS now needs to pursue scale outside of Singapore.
DBS?geographic reach extends beyond Singapore to Hong Kong, Thailand, Indonesia, and the Philippines. This network provides DBS with many advantages. The main hubs in stable markets such as Hong Kong and Singapore enable DBS to take on the lumpiness and volatility of emerging Asia without undue strain to the Group earnings and balance sheet as a whole. The Group is able to maintain stable credit ratings that are essential to maintaining its low funding cost advantage. DBS also finds that since markets like Singapore and Hong Kong are in similar stages of development, new products developed in either of these countries are easily transferable to the other, giving the Group twice the bang for the buck. The core of DBS?regional operations is anchored in Singapore, following the combination POSB and DBS in 1998. Also in Singapore, DBS operates its 59.47% owned securities business, DBS Vickers Securities. The securities business is one of the top three in Singapore with over 17,000 online trading customers.
DBS in the Region
DBS operates across the region through several key financial entities. In Singapore, DBS Bank is the main legal entity that operates both the POSB and DBS Bank brands. Through its regional legal entities, DBS has local market operations in Hong Kong, Thailand, the Philippines, Indonesia, and China. The regional banks all consolidate into DBS Bank.
The most significant overseas location for DBS is in Hong Kong where DBS consolidates 100% of Dao Heng Bank and 100% of DBS Kwong On Bank. These operations also support DBS?growth into China as the Hong Kong customer base of small and medium sized enterprises are rapidly expanding into China’s Pearl River Delta region. Overall, Hong Kong and China operations make up about 32% of total revenues.
The regional countries, including Thailand, Indonesia and the Philippines make up about 5% of DBS?total revenues. The revenues are driven from DBS?51.7% controlling ownership of DBS Thai Danu Bank, our 99% ownership of PT Bank DBS Indonesia, and our 20.8% stake in the Bank of the Philippine Islands.
In 2002, DBS completed the entire 100% acquisition of DBS Kwong On Bank and Dao Heng Bank by purchasing the remaining minority stakes. This move enables DBS to legally merge the two Hong Kong legal entities, and to have a free hand in running the Hong Kong operations. Hong Kong operates 75 branches and more than 90 ATMs. The combination of DBS?two Hong Kong legal entities and its Hong Kong branch makes DBS?Hong Kong operations the fourth largest banking entity in the market. DBS also estimates that it is the third largest issuer of credit cards in Hong Kong. The Group also has a leading share of the Hong Kong SME market that will be a key element of our growth into China. Several specialized teams, including private equity, loan syndications, trade finance and regional investment banking, that once operated out of Singapore have been relocated to Hong Kong to better capitalize on the opportunities there and in North Asia.
DBS has a leading share of the SME market in Hong Kong. With DBS?commitment to the SMEs, Mr She Hing Chiu, Executive Director of Hon Po Restaurant can continue planning for the expansion of his restaurant outlets. DBS?strong regional presence has enhanced its 10-year relationship with clients such as the Shin Group in Thailand. Celebrating Shin Group’s business success are Mrs Siripen Sitasuwan, President and Group CFO of Shin Group, and Mr Surakiat Wongwasin, MD and Head of DBS Thai Danu Bank’s Commercial Banking Group.
DBS also has access to the key Southeast Asian markets of Thailand and the Philippines. Its 51.7% owned DBS Thai Danu Bank has 62 branches and about 120 ATMs. The operation turned profitable in 2001 after selling 77% of its NPLs in 2000. In the Philippines, DBS works closely with its 20.8% owned associate, Bank of the Philippine Islands (BPI). Widely acclaimed as the premier bank in the Philippines, BPI has the best consumer banking reach with over 700 branches and 1,100 ATMs. The BPI and DBS Singapore ATM networks have been linked to enhance services for customers.
DBS?access to key Southeast Asian markets means being able to support the business
initiatives of Mr Vichai Raksriaksorn, Group Chairman and CEO of King Power International
Group, whose 48 Duty Free outlets spread across Thailand’s domestic and international terminals.
The growth and consolidation of DBS?Hong Kong presence has given the Group a solid foundation on which to grow into China. DBS?historical relationship with China is grounded by years of support for China’s many development and infrastructure projects. It was one of the first 10 banks to obtain a Renminbi license in Shanghai when licenses were issued in 1998. DBS plans to utilize its team of experienced Hong Kong bankers to leverage DBS?historical market access.
DBS?focus will be on three main areas where it already has active presence through its branches.
•   The Pearl River Delta, where DBS has a Renminbi licensed branch in Shenzhen.
•   The Yangtze River Delta, where DBS will leverage the Renminbi licensed branch in Shanghai.
•   The Beijing-Tianjin Corridor, where DBS will capitalize on its Beijing branch.
At the outset, we will focus on our SME customers from Hong Kong and Singapore that are migrating some of their operations into, or expanding their operations in, Southern China. DBS will establish itself as a financial services partner, offering a wide range of products in trade finance, syndications, treasury and investment banking. In future years, in accordance with the WTO liberalization schedule, DBS will eventually pursue consumer-banking opportunities.
DBS?Reach in Greater China
Consolidating to Become a Lower Cost Producer     Consolidating to Become a Lower Cost Producer
A Pillar for the Community and for Employees     A Pillar for the Community and for Employees
DBS > DBS Annual Report 2002 > Scaling a Pan-Asian Network