Preservation central to DBS philosophy

Su Shan Tan, appointed head of wealth management by Singapore’s home-grown financial institution, DBS, in 2010, is no stranger to difficult times. While not exactly relishing the current banana skin-laden macro-economic backdrop or the deep crisis which preceded it, the 43-year old local celebrity banker is ready for the challenge of “ramping up” client assets from $35bn to $50bn in the next three years.

Recalling her working relationship, nearly 17 years ago, with the man who famously brought down the English establishment’s favourite bank, Barings, Ms Tan is keen her 2,100 staff should also learn lessons from markets and events, rather than expecting Singapore’s Asian success story to last forever.

“Nick Leeson was my options settlements clerk at Barings. I knew him really well and he was a smart guy,” remembers Ms Tan, whose finance career started in London and encompassed roles heading up pan-Asian operations at banks including Morgan Stanley and Citi before joining the region’s sixth largest wealth management group.

“But then things started to go wrong. That’s how I learned the importance of controls and separation of duties, very clearly and not to take anything for granted, even if you see good returns. With Nick Leeson, I was learning first hand how lack of risk management can really blow up a bank.”

Training for her relationship managers in the bank’s own DBS Institute is “non-negotiable”, states Ms Tan, well-known among staff for her 7.30 am talks on how to engage clients and on the inner workings of structured products. “I want to shortcut my bankers’ learning process. I have been through the pain and want to share my expertise.”

She also regularly paces round the offices and demands spot checks, that relationship managers understand fully the products they are selling. “Sometimes they don’t know how it works, so I ask them: ‘Do you want me to tell you or find out yourself?’ If they find out themselves, they remember forever.”

These issues of training, explaining products and risk management were key to DBS, 28 per cent-owned by Singapore’s sovereign wealth fund Temasek, being chosen as Best Private Bank in Singapore by the 7-strong judging panel in PWM’s Global Private Banking Awards for 2010.

While she sees no excuses for private bankers seriously denting their clients’ positions through greed and ignorance of positions and controls, Ms Tan outlines her vision of leadership through turbulent and depressing times. “When people are getting suicidal, it may just be time to start to look at things positively,” she believes, adding she learned the valuable skills of keeping a team together through the events of the Asian crisis of the late 1990s, and then put them to good use during the global financial crisis 10 years later.

“I learned how to keep a team motivated and how to keep clients onside. If you know they are being honest, they will stay with you,” says Ms Tan, recalling how she went into “battle mode” in her previous role at Morgan Stanley during 2008.

Confirming the Asian finance legend of how she recalled pyjama and slipper-clad junior assistants to head office in the dead of night during September 2008, Ms Tan almost fondly recalls the bunker mentality. “If the general doesn’t tell you what the strategy is, then you will panic. It filters right through to the advisers and assistants.”

But unlike some competitors, she knew about keeping lines of communication open. “I also learned a lot from smart clients,” says Ms Tan, revealing her admiration for many of the older generation of Asian entrepreneurs and families she advises. “They would smile and say to me ‘Su Shan, never waste a crisis or recession.’ That’s what they would tell us.”

These very wealthy, self-made old-timers, she says, lived through several cycles and understand the value of portfolio diversification, contrarianism and buying up cheap, unfancied assets. This is in stark contrast to most Asian mass affluent and high net worth clients, who are reluctant to invest outside their own, high-growth region.

“You need to have diversification, although many clients don’t really value it,” says Ms Tan. “Lots of our clients believe in the concentration of wealth and investing in an asset they know best.”

Diversification is particularly important for second generation clients, she believes. “If you know real estate, your wealth is tied up in the business, but if you have children who are not as smart as you, you need to hedge yourself against market cycles and interest rate, currency and market risk.”

Swimming against the tide of a risk-taking Asian mindset, preserving family fortunes is always at the heart of the DBS portfolio management philosophy. “We are not here to teach clients how to make a second fortune, but how to protect it, hedge it and potentially grow it for the next generation,” believes Ms Tan.

Despite her best efforts to market more broadly her Asian-centric discretionary mandate, the less economically rewarding advisory model is still favoured. “The Asian family office is looking for deal flow. They have interest in IPOs, debt capital markets and convertible bonds. We can provide this.”

Products are often created in tandem with the asset management arm DBSAM, which joined forces with Tokyo-based Nikko Asset Management in a bid to create a leading pan-Asian funds house at the end of 2010. The combined firm will manage $150bn.

“Asset management is an important part of wealth management, but it should be bigger for us,” she admits stressing that clients need an Asian-centric solution. “You can’t just buy a US or European product and say that is right for the Asian client. Everyone has a home country and currency and we need to be very cognisant of a client’s portfolio needs and customise it to be more Asian-centric. What we do with asset management will help to make it bigger and better.”

But the private bank does not rely only on these proprietary asset management solutions. DBS also holds a 33 per cent stake in Chinese bottom-up fund house Changsheng, which last year recommended private clients should particularly favour infrastructure led investments. “They told us railroads will change China in terms of improving productivity, just like they underpinned an industrial revolution in the US,” reports Ms Tan. “It used to take eight hours to travel from Shenzen to Beijing, now that is down to four.”

These insights led DBS to launch its China Rail Network Opportunities fund, exclusively for its private clients in 2010, with any group presentations around Chinese themes particularly hot currently. “They can’t get enough of it in Singapore. The hunger for knowledge on China is great,” reveals Ms Tan, adding that DBS is also increasingly trying to recruit investors from Europe and the Middle East who are keen to put their money to work in Asia.

Nearby Indonesia has also been earmarked as a key growth market and she is aware that this foreign footprint, currently well behind local rival Standard Chartered, will be key to the group’s expansion, stifled by a saturated local market.

Plans are already well-advanced to move into 700,000 square foot custom-built offices in Tower 3 of the Marina Bay Financial Centre, the city-state’s “new downtown”, for 2013.

“Singapore is the Switzerland of the East,” says Ms Tan. “It may not have the same buzz as some of the bigger cities, but it is safe. You’re in Asia, but with first world governance and we can still give you exciting, high-growth products from this base.”

CV

Su Shan Tan

2010: Joined DBS as Managing Director and Group Head of Wealth Management

2008: Head of Private Wealth Management for South East Asia, Morgan Stanley

2005: Regional Head for Singapore, Malaysia and Brunei, Citi Private Bank

1997: Executive Director, Morgan Stanley, Singapore, serving as investment adviser to high net worth families, corporates and institutions in the region

1989: Institutional equity sales, ING Baring Securities in London, Tokyo and Hong Kong

Other positions include: Founder of Financial Women’s Association in Singapore; Investment committee member, Ministry of Health Holdings; Board member, Khoo Teck Puat Hospital; Board member, KK Hospital Health Endowment Fund; Member of Monetary Authority of Singapore Private Banking Advisory Group; Adviser to Raffles Girls Primary School

Su Shan Tan: "Smart clients used to say to me: never waste a crisis or recession"