Ib Assignment

SITUATION BASED PROBLEM SOLVING DBS GROUP (SINGAPORE)

SUBMITTED TO: DEEPAK PANDEY

SUBMITTED BY: ANAMIKA (11812591)

INTRODUCTION DBS Bank is a multinational banking and financial services corporation headquartered in Marina Bay Financial Centre Tower 3 Marina Bay, Singapore. The company was known as The Development Bank of Singapore Limited, before the present name was adopted in July 2003 to reflect its changing role as a regional bank. The bank was set up by the government of Singapore in July 1968 to take over the industrial financing activities from the Economic Development Board. Today its, branches numbering more than 100 can be found island-wide. DBS Bank is the largest bank in South East Asia by assets and among the larger banks in Asia, with total assets of S$518 billion as at 31 Dec 2017. It has marketdominant positions in consumer banking, treasury and markets, asset management, securities brokerage, equity and debt fund-raising in Singapore and Hong Kong. Global Finance named DBS as the world’s best bank for 2018. DBS Bank's largest, and controlling, shareholder is Temasek Holdings, Singapore's second largest sovereign wealth fund (after GIC). As of 31 March 2018 Temasek owns 29% of DBS' shares. The bank's strong capital position, as well as "AA-" and "Aa1" credit ratings by Standard and poor’s and Moody’s that are among the highest in the Asia-Pacific region, earned it Global Finance's "Safest Bank in Asia" accolade for six consecutive years, from 2009 to 2015. The Bank was also awarded the Best Digital Bank in the World in the year 2016 by Euromoney. With operations in 17 markets, the bank has a regional network spanning more than 250 branches and over 1,100 ATMs across 50 cities. 

Ten largest shareholder as of 28 February 2017 are:

1.

Citibank Nominees Singapore Pte Ltd

508,157,126 19.99

2

Maju Holdings Pte Ltd

458,899,869 18.05

3.

DBS Nominees Pte Ltd

386,196,329 15.19

4.

Temasek Holdings (Private) Ltd

284,145,301 11.18

5.

DBSN Services Pte Ltd

244,851,872 9.63

6.

HSBC (Singapore) Nominees Pte Ltd

164,547,907 6.47

7.

United Overseas Bank Ltd

63,140,475

2.48

8.

Raffles Nominees (Pte) Ltd

47,021,255

1.85

9.

BNP Paribas Securities Services

33,504,104

1.32

10

Lee Pineapple Company Pte Ltd

19,450,000

0.76

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PRODUCTS : Financial services.

 SERVICES : Retail Banking, Corporate Banking, Investment Banking, Mortgage Loans, Private Banking, Wealth Management, Credit Cards, Finance and Insurance. 

REVENUE: US$10.28 billion (2016)



Operating Income: SGDC6.517 billion (2016) SGDC6.037 billion



Net Income: US$3.07 billion (2016)



Total Assets: US$333.48 billion (2016)



Number of employees: 24,174

History Established on 16 July 1968 by the Government of Singapore to take over the industrial financing activities from the Economic Development Board, the bank's main purpose was to provide loans and financial aid to the manufacturing and processing industries and to help establish and upgrade existing industries in Singapore. In 1960, the Singapore government invited a United Nations (UN) industrial survey mission to assess the economical situation in Singapore and to come up with an industrialisation programme for the city. The proposal included setting up a development bank, together with an economic body to attract foreign investments and provide financing and managing the industrial estates. The bank was incorporated in July 1968 and began operations in September of the same year.

Acquisition of POSB: Formerly known as Post Office Savings Bank, it was established on 1 January 1877 in the General Post office building, in Raffles place by the British Colonial Government in Singapore. By 1976, POSB had one million depositors, while deposits crossed the S$1 billion

mark. The bank was then renamed POSB Bank in 1990, before being acquired by DBS Bank on 16 November 1998 for S$1.6 billion, giving it a dominant market share with over four million customers. POSB Bank still operates one of the highest number of bank branches in Singapore, especially in the suburban neighbourhoods, and operates the highest number of ATM outlets throughout Singapore. The integration of both banks allowed customers of either bank to share the facilities; DBS Bank depositors may use the Cash Deposit Machine installed island wide in POS Bank branches, likewise for POSB Bank depositors. Temasek Holdings Private Limited, a company wholly owned by the Ministry of Finance, is deemed to be interested in all the ordinary shares held by Maju. In addition, Temasek is deemed to be interested in 4,449,781 ordinary shares in which it’s other subsidiaries and associated companies have or are deemed to have an interest pursuant to Section 4 of the Securities and Futures Act, Chapter 289.

Competitors: 





OCBC Bank OCBC Bank is DBS Bank's no.1 competitor. OCBC Bank is a Public company that was founded in 1932 in Singapore, Other. OCBC Bank is in the Banks industry. Compared to DBS Bank, OCBC Bank has 4,826 more employees. Standard Chartered Standard Chartered is seen as one of DBS Bank's biggest rivals. Standard Chartered was founded in London, England} in 1969. Standard Chartered is in the Banks field. Compared to DBS Bank, Standard Chartered generates $14.5B more revenue. UOB UOB is one of DBS Bank's top competitors. UOB is headquartered in UOB Plaza 2, Other, and was founded in 1935. UOB competes in the Banks industry. UOB generates 1,590% the revenue of DBS Bank. RANK

1.

COMPANY NAME DBS OCBC Bank

LEADERSHIP CEO SCORE Piyush 77/100 Gupta 75/100 Samuel N.

EMPLOYEES

REVENUE

24,174

TOTAL FUNDING $0

29,000

-

$7.7 B

$427.7 M

Tsien 2.

Standard Chartered

Bill Winters

76/100

86,000

-

$14.9 B

3.

UOB

Wee Ee Cheong

74/100

25,420

-

$6.8 B

NEWS: 

DBS Bank: DBS and Singapore Airlines form digital partnership DBS and Singapore Airlines form digital partnership Finextra DBS Bank and Singapore Airlines (SIA) have today come together to sign a memorandum of understanding (MOU) to enhance digital capabilities.

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DBS Bank: DBS CEO's remuneration up 15.5% for 2018 DBS Group Holdings chief executive Piyush Gupta's pay grew by 15.5 per cent to S$11.9 million last year, going by the bank's latest annual report out on Thursday.

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DBS Bank: DBS Bank: It's Time to Add More Gold to Portfolios

Markets may have recovered from their fourth quarter ructions, but DBS Bank is advising adding more gold to portfolios to stave off the effects of continued volatility.

PESTEL Analysis 

PESTEL Analysis: PESTEL analysis is a tool used by marketers and investors to analyze and monitor Macro-environmental factors affecting business operation. PESTEL is an acronym Political, Economic, Social, Technological, Environmental, and Legal (Choudhry, 2010). These summarize the entire external marketing environment. The following is the PESTEL analysis for DBS bank (Ruckemann, 2013). Political factors: The political stability in Singapore has created an environment of a quite low political risk (Menon, 2013). This kind of environment has encouraged more local and international investment in the country. Increase in business activities is encouraging the Development of Banking industry. DBS being one of the major players in the industry enjoys the development of the industry. Singapore has highly growing merging market. Highly profitable larger business organizations are coming up (Menon, 2013). As a result, the government might increase the tax rates. Economic factors: Singapore is experiencing increasing labour cost. This might affect the company by taking away the cost advantage. Singapore dollar is strengthening in the currency market (Menon, 2013). This might make it more expensive for DBS to do business in countries and continents such as Europe, Africa, and South America. The high and still developing per capita in Singapore is likely to expand the potential market for the higherend consumers of the services provided by DBS (Menon,2013). Labour shortage in Singapore is likely to trigger further increase of the labour cost in the country hence disadvantaging companies such as DBS bank. Social Factors: The culture of hard work and materialism desire among the Singaporeans could encourage the further improvement in the living standard (Menon, 2013). Increasing living standards in the country could encourage the business activities in the country including banking activities (Menon, 2013). This could benefit banking institutions including DBS Bank. High level of education in Singapore is likely to create a pull of skilled labor for business organizations such as DBS Bank. Technological Factors: One of the key drives to the economic development in Singapore is increased connectivity and improved communication system (Siaw et al., 2004). The country

has a widespread IT infrastructure. This encourages e-commerce which banking industry depends on greatly (Siaw et al., 2004). DBS Bank exploits this opportunity to increase its connectivity with the stakeholders. DBS Bank is the leading business organization to effectively implement the use of Information communication Technology which has increased ATM network efficiency and customer satisfaction in general (DBS, 2016). Legal Factors: DBS Bank is in a highly regulated sector. The government of Singapore has several business laws and regulations which aim at protecting the rights of all the players in the banking industry (Bowhill, 2008). Due to the rapid growth in economy which is as a result of increasing business activity in the country, the government is likely to increase the level of litigation to the both public and financial sectors (Ruckemann, 2013). By planning to expand the area of operation beyond the boundaries of the countries it is operating in currently, DBS Bank is likely to face increased business laws and regulations. Environmental Factors: The activities in the Banking industry have relatively the lowest negative impact on the natural environment (Bowhill, 2008). However, as a big institution, which is ethically required to encourage environmental responsibility within the community where it is operating. Currently the country is under a serious problem of environmental pollution due to industrialization which is going on. The country’s mangrove forest is under a great threat as 30% of it has been depleted.

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Porter’s Five Forces Analysis for DBS Bank Competitive rivalry: Asian Banking industry is very competitive. There are more firms in the industry which are trying to secure a better position in the industry (Kawai et al., 2012). Every bank is, therefore, trying to lure the customers to their side so as to beat competition. More banking institution from Europe and America are also extending their services to Asia hence providing more competition to DBS Banks (Kawai et al., 2012). DBS Bank, however, has adopted strategies which helps it to acquire and maintain the loyalty of its customers. The strategy includes offering lower financing, offering better investment services, and higher rates (Kawai et al., 2012). The company also carry out business integration such as merger and acquisition to expand its operation size so that it can survive the competition in the industry. Bargaining Power of Suppliers: The primary resource for firms in the Banking industry is capital. The major suppliers of capital to banking firms are majorly four, that is; Mortgages and loans, customer deposits, Mortgage-baked securities, and loans from other financial institutions (Menon, 2013). DBS Bank is appropriately utilizing the four supplier hence necessary resources to carry out their services. The bargaining power of suppliers, however, ranges from medium to high since there are more banking firms in the industry. Bargaining Power of Buyers: The major factor affecting the power of buyers in banking industry is the higher switching cost. Most customers have a specific banks which they trust with their banking needs, mortgage, checking, and savings. Switching for another bank by such kind of customers might be very costly (Kawai et al., 2012). DBS Bank has taken this advantage to regulate the bargaining power of its customers. Threat of New Entrants: Banking industry is experiencing extremely high threats of entry. It is estimated that the over 300 new banks open each year. This is despite the barrier to entry caused by different factors such as high cost of opening and many government laws and regulation. Asia, especially, Singapore is one of the regions which experiencing such a threat. The currently existing firms, led by DBS Bank, uses business integration such as merger and acquisition as a strategic measure to control the threat. DBS Bank acquires small Banking

firms so as to turn their existence in the industry its advantage. Threat of Substitute Products: The threat of substitution for banking industry are from nofinancial competitors such as fixed income securities, insurance, and mutual funds. There are is a very limited threats of substitution for deposits and withdrawal services for the firms in the industry. Payment method substitute is also a threat to the banks including DBS Bank. For example, Large electronic companies, Car companies, and Jewellers tends to offer higher purchase payment for high valued items services which requires a lower interest rates compared to Bank rates. This discouraging taking loans from banks.

 EXPANSION AND GROWTH PLAN SINGAPORE, INDIA, 04 March 2019 – Underlining its commitment to India, DBS Bank officially announced the launch of its locally incorporated wholly owned subsidiary, DBS Bank India Limited (DBIL) today. This marks a key milestone for the bank, which has been present in India for 25 years. DBS set up a representative office in India in 1994 and opened its first bank branch in 1995. It currently operates in 12 cities: Delhi, Mumbai, Bengaluru, Chennai, Kolkata, Pune, Nashik, Surat, Kolhapur, Salem, Cuddalore and Moradabad. With DBIL, DBS will accelerate its growth plans, expand its operations and build greater scale in India through a “phygital” model to further serve large corporates, small and medium enterprises (SMEs) and individual customers. DBIL intends to establish over 100 customer touchpoints – a combination of branches and kiosks – across 25 cities in the next 12-18 months. This month, DBIL will open nine new branches and extend its reach to Hyderabad, Ahmedabad, Coimbatore, Vadodara, Indore and Ludhiana. In addition, it will expand within cities where it is already present in, opening branches in Andheri in Mumbai, as well as Gurugram and Noida in the National Capital Region. It will also open five branches in unbanked rural centres. Commenting on the launch, DBS Bank India CEO Surojit Shome said, “This is a significant milestone for DBS India as it enables us to deepen and embed our commitment to growing our franchise in India in a sustainable manner. Over the last few years, we have harnessed the power of technology to reimagine banking and provide innovative banking solutions for individuals as well as business customers. The launch of DBIL will enable us to further build our relationship with our customers and create differentiated offerings as financial services continues to transform rapidly with changes in technology and consumer preferences”. Piyush Gupta, Group CEO of DBS said, “As an Asian bank, it is imperative that we take a longterm view of the region. We believe it is important to continue investing in Asia’s two biggest markets – China and India. In 2016, we launched digibank, a groundbreaking mobileonly offering, in India. We recently started piloting data-driven lending solutions for small and medium enterprises. The creation of a full-fledged subsidiary in India allows us to scale up further and bring to customers a more compelling proposition.” DBS, which was named Best Bank in the World in 2018, has been on an ongoing journey to

shape the future of banking. Since the launch of digibank by DBS nearly two years ago, the bank has acquired over 2.5 million digibank customers in India. In addition to savings accounts, digibank also offers unsecured loans and is the first to offer paperless onboarding for mutual fund investments from multiple fund houses. DBS India was also the first to offer the choice of multiple life insurance providers based on an analytics-driven platform. For businesses, the bank launched a first-of-its-kind connected banking platform, integrating its e-banking solution with one of India’s leading accounting and ERP software platforms. To further advance its digitalisation and innovation thrust, the bank established its largest technology and operations hub outside Singapore, DBS Asia Hub 2 in Hyderabad, in 2016. 

DBS Bank India is looking to hire around 1,000 more technology engineers for its technology centre 'DBS Asia Hub 2' here over the next 24 months, a top official said here Tuesday, The DBS Group had established a technology hub DBS Asia Hub 2 in Hyderabad in 2016, the group's largest technology and operations hub outside of Singapore. The Singaporean lender is the largest foreign bank to become a fully-owned local subsidiary. "The hub has about 2,000 engineers building smartest solutions, 1,200 software engineers and developers work with DBS and about 800 who work with partners and build our technology products. We expect to grow it to 3,000 over the next 24 months," DBS Bank India chief executive Surojit Shome told reporters after launching its first branch in Hyderabad, technology product, We expect to grow it to 3,000 over the next 24 months," DBS Bank India chief executive Surojit Shome told reporters after launching its first branch in Hyderabad. He said they expect the bank's balance sheet to grow by three times in the next five years from the current Rs 50,000 crores. The bank invested (capital) Rs 7,700 crore for its banking business in India and Rs 1,800 crore was invested in 2018. DBS Bank India currently operates in 12 cities and intends to establish over 100 customer touch points -a combination of branches and kiosks--across 25 cities in the next 12-18 months and invest Rs 125 crore to Rs 150 crore on the network expansion. "Roughly about half of what we develop (digital solutions) is developed in the second technology centre (DBS Asia Hub 2) in Hyderabad. We expect to employ around 1,000 more technology engineers and people with software skills as we build new solutions," he said. DBS Asia Hub 2-Head Mohit Kapoor said the recruitment drive is already on and hiring is done through different channels, including hackathon.