| John Olds | ||||||
John Olds sits in his office on the 45th floor of DBS Tower One, outlining what he hopes will be an ever-improving set of results for the largest of Singapore’s banks. Olds joined DBS as CEO in mid-1998, the First foreigner to run a Singapore bank. He has since been overseeing a complete overhaul of the bank’s business lines, transforming the institution from the last vestiges of its role as a traditional development bank lending at low margins, to one hoping to dominate at the retail and wholesale level, both in Singapore and Asia-wide.
DBS’s return on equity has always been low, rising from 1.3% in 1998 to just 10% in 1999. That’s hardly unusual for the banks in Singapore, except for United Overseas Bank, whose non-banking assets, especially property, usually push its return on equity into the high teens. According to Olds, DBS’s return “should increase to 12% for 2000, and we should improve on that in 2001 and 2002. If we can earn 15% ROE while we are still investing in the transformation, that’s great”.
The story sounds eerily familiar to the bank where Olds spent 24 years of his career, JP Morgan. Throughout the 1990s Morgan was in transformation mode, from an old-style lender to a capital markets house, recording ROE in the mid-teens at best until 2000, when it breached 20% for the First time. It was too late by then, and by the year-end it had been taken over by Chase Manhattan. The similarity becomes even more apparent after a chat with Jackson Tai, the chief Financial officer. He also has responsibility for the investment-banking operations, and talks about how they will take the bank forward by increasing the non-interest income for the bank.
Olds bristles at the comparison, mutters a few words about missed opportunities, and you know that if you push only slightly he would regale you with his version of the fall of the house of Morgan.
But in one respect the comparison is not valid: the US bank was always trying to play catch-up with its rivals but DBS has become the leading light for Singapore’s banks, both in wholesale and retail business.
That is no doubt why Olds believes that now is a good time to leave, as he announced on 22 January. Everyone knew he would leave sooner rather than later; he said that three years was pretty much his limit when he took the job, and he repeated it to Euromoney at the start of January, less than two weeks before officially announcing his retirement. “I said I’d do two or three years. In fact that’s the way I always preferred to work at JP Morgan, doing three-year stints in departments before moving on. I like building things and setting things in motion; just monitoring something bores me, frankly.”
His replacement as CEO is Philippe Paillart, a Frenchman and one of nearly 100 senior bankers Olds has persuaded to join DBS from international banks. Paillart, who joined as head of consumer banking just last summer, has worked at Citibank and Standard Chartered, as well as Ford Motor Credit. Tai, another Olds recruit, this time from JP Morgan, will be adding president and chief operating officer to his CFO title.
