Possible CEO changes at DBS, UOB should be seen as positive

CHANGE occurred at the apex of Singapore’s financial sector when Chia Der Jiun succeeded Ravi Menon as the managing director of the Monetary Authority of Singapore (MAS) early this year. 

Menon was the central bank’s longest serving managing director, having led it since 2011. During Menon’s tenure, MAS won numerous accolades.

Are more high-level changes in Singapore’s finance sector forthcoming? The chief executive officers of DBS and UOB are older than Menon, and have been in place since September 2009 and April 2007, respectively.

Certainly, investors may be happy with how DBS’ CEO Piyush Gupta and UOB’s deputy chairman and CEO Wee Ee Cheong are doing their jobs and have scant appetite for leadership change. 

DBS and UOB saw net profit rise 23 per cent year on year (yoy) to S$10.1 billion and 25 per cent yoy to S$5.7 billion, respectively, last year. Both banks were much more profitable in 2023 compared with before the pandemic in 2019.

For the first quarter, DBS’ net profit grew 15 per cent to nearly S$3 billion, while UOB’s slipped 2 per cent to under S$1.5 billion.

Possibly, Gupta and Wee, who are 64 and 71, respectively, can carry on serving in their current roles for a decade more. 

Major world leaders such as Joe Biden of the United States and Narendra Modi of India are older than Gupta and Wee. Warren Buffett at 93, serves as chairman and CEO of conglomerate Berkshire Hathaway, while 75-year-old Bernard Arnault leads luxury goods giant LVMH.

Indeed, investors could get jittery when a successful and long-serving CEO departs. Will performance be sustained? Can a new leader win over investors and staff?

Bob Iger handed over the CEO reins to Bob Chapek at media and entertainment group The Walt Disney Company in February 2020 after spending 14.5 years in the role, only to return as CEO in November 2022.

Still, changing CEOs soon could be positive for DBS and UOB.

Strong platforms

First, both banks are in fine fettle. They are well-funded, have robust platforms, operate in promising markets and have strong brands.

While there are mounting economic uncertainties and geopolitical tensions threatening economic and trade growth, DBS and UOB are largely exposed to countries with favourable economic outlooks. 

Both banks are active in Singapore, which is a stable market with strong growth prospects in wealth management.  

DBS is growing in India, where economic prospects appear the brightest among big countries. UOB is expanding in fast-growing South-east Asia. It completed buying Citigroup’s consumer banking franchise in Indonesia, Malaysia, Thailand and Vietnam in 2022 and 2023.

With the world not in the throes of a major global economic or financial crisis, the backdrop for leadership change seems fine.

Possible successors

Second, while succession involving an established leader handing over is tricky, DBS and UOB are well-placed to handle leadership change.

DBS has seasoned bankers with wide-ranging experience, who are in their 50s, sitting in its top ranks. Tan Su Shan, who leads institutional banking, could notch another feather in the cap for female CEOs of large groups. Helen Wong leads rival OCBC . 

Another possibility might be Shee Tse Koon, who leads consumer banking and wealth management. DBS targets boosting assets under management for its wealth business to S$500 billion by the end of 2026.

Other leading candidates include Lim Him Chuan, who heads strategy, transformation, analytics and research, and Singapore country head Han Kwee Juan. 

Like Gupta, Han spent many years at Citi before joining DBS. The bank was hit by several major digital disruptions last year.

Could Han, who double-hatted by being the bank’s acting chief information officer between November 2023 and May 2024, win credit for leading efforts to strengthen DBS’ technology resiliency?

UOB could hire an outsider as CEO. Possibly, a senior external hire can join the bank for around a year before assuming the top job. Wong joined OCBC in February 2020 as deputy president and global wholesale banking head before becoming group CEO in April 2021. 

With its solid financial position and geographic footprint, UOB can entice top talent into its management ranks.  

Optimal time frame

Third, having CEOs serve for tenures of around 10-12 years may be optimal for Singapore’s banking trio. 

A new leader could take a few years to steer new directions for a business and start making his mark. He then needs to ensure changes and acquisitions are yielding results. Thereafter, the CEO can work on ensuring smooth leadership succession. 

If incumbent CEOs hold office for too long, generational leadership change cannot take place. A younger banking chief might better deal with digitalisation and the rise of artificial intelligence, as well as engaging younger consumers and nurturing young talent. 

Critically, changing CEOs every 10 years or so signals to an organisation’s talent that they can aim for and potentially reach the pinnacle

People typically dislike change. Fans of English Premier League football club Liverpool were sad to bid farewell to Jurgen Klopp at his last match as the club’s manager last month.

Klopp, who is viewed as a transformational leader, cited fatigue as being the reason behind his vacating the hot seat. 

Under Klopp’s nearly nine years in charge, Liverpool played attractive football and enjoyed much success. Can the new man Arne Slot successfully steer the storied club? 

Likewise, many shareholders will be sad to see Gupta and Wee leave their CEO posts and fret over how a new leader will fare. Still, shareholders should try to see the positives from a change at the helm taking place soon at DBS and UOB.  

While steering a bank is stressful, earning say S$12 million annually is juicy. Expect many seasoned and ambitious bankers to willingly take the heat of leading DBS or UOB. 

Meanwhile, Gupta and Wee can still contribute to Singapore in other ways even after relinquishing their CEO reins. 

The writer owns shares in DBS and UOB