Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON
  1. Homepage
  2. Equities
  3. Singapore
  4. Singapore Stock Exchange
  5. DBS Group Holdings Ltd
  6. News
  7. Summary
    D05   SG1L01001701

DBS GROUP HOLDINGS LTD

(D05)
  Report
SummaryChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

DBS faces potential culture clash as it scoops up distressed Indian lender

11/18/2020 | 08:00pm EDT

(Repeats from Wednesday)

MUMBAI/BENGALURU/SINGAPORE, Nov 18 (Reuters) - DBS Group's move to take over troubled Lakshmi Vilas Bank will give Southeast Asia's largest lender the boost in India it has long desired, but aligning the two banks' business cultures could prove tricky.

LVB, facing mounting bad loans and governance issues and a failure to secure capital, is set to be folded into DBS's Indian subsidiary under a plan proposed by India's central bank, which took control of the 94-year old Chennai-based lender on Tuesday, citing a "serious deterioration" in its finances.

The plan will accelerate Singapore-based DBS's expansion ambitions in India and potentially transform it from a largely digital bank in the country to one with hundreds of branches.

DBS currently has just over 30 branches in India, while LVB has more than 550, and 900-plus ATMs. DBS, which has a market value of about $47 billion, will inject 25 billion rupees ($337 million) into its India subsidiary for the proposed merger.

"The branches are the crown jewels and offer a readymade network at a very affordable price," said Willie Tanoto, an analyst at Fitch Ratings in Singapore.

But turning around and integrating LVB, which employs more than 4,000 staff, will pose challenges for DBS, even though the Singapore bank has been in India since 1994 and in 2019 converted its Indian operations from a branch to a wholly-owned subsidiary.

India's banking union has already expressed reservations about the potential DBS deal.

The All India Bank Employees' Association (AIBEA), which represents about half a million bank employees, protested against the proposed amalgamation and has demanded a merger with a public sector lender instead.

"Government must preserve the essence of an Indian bank and give it to a national lender instead of handing it over to a foreign bank," said C.H. Venkatachalam, AIBEA general secretary.

LVB did not immediately respond to a Reuters' email seeking comment on the proposed merger, while DBS declined to comment.

In terms of culture, there are differences between the two banks, with DBS staff trained in digital skills and strong underwriting processes at a multinational bank, while LVB has a more traditional client-focused approach.

Their branches also differ in look and feel. LVB's branches have steel benches for waiting customers and numerous notices on walls and windows, contrasting with a more minimalist style often seen in branches at multinational banks.

"Prima facie, there will be challenges in terms of cultural integration as well as process-orientation of people who've not worked in a new-age bank," said Venkat Iyer, partner at recruitment firm Aventus Partners.

Macquarie analyst Suresh Ganapathy said beyond any cultural differences, there are other issues at play.

"DBS employees will have far better capability in terms of digital banking, credit appraisals and underwriting," Ganapathy said.

Some analysts highlighted that DBS has a strong track record in acquisitions, such as its takeover of a failed Taiwanese bank in 2008 and the acquisition of ANZ's wealth management and retail businesses in five Asian markets, completed in 2018.

One fund manager said the deal was a strategic fit but he also pointed to a potential culture clash.

"The key unknown at this stage is execution especially for a turnaround acquisition like this where Lakshmi Vilas Bank, which appears to have been operating under a different risk appetite and intensity of internal controls, will need to be aligned with DBS's prudent and conservative culture," said Xin-Yao Ng, Asian equities investment manager at Aberdeen Standard Investments, which holds DBS shares. ($1 = 74.1521 Indian rupees)

(Reporting by Nupur Anand in Mumbai, Chris Thomas in Bengaluru and Anshuman Daga in Singapore; Additional reporting by Abhirup Roy in Mumbai and Nivedita Bhattacharjee in Bengaluru Editing by Euan Rocha and Jane Merriman)


ę Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 0.39% 28.32 End-of-day quote.24.76%
AVENTUS GROUP 0.00% 3.48 End-of-day quote.27.01%
DBS GROUP HOLDINGS LTD 0.38% 31.49 End-of-day quote.25.76%
INDIAN BANK 2.90% 187.75 End-of-day quote.119.46%
All news about DBS GROUP HOLDINGS LTD
02:54aDBS : Bank Files for Singapore Listing of Over $1 Billion Worth of Euro, US Dollar Bonds
MT
10/25DBS : Bank India completes maiden active loan switch ahead of LIBOR transition
PU
10/25DBS : Names Chief Risk Officer
MT
10/24DBS : names career DBS banker Soh Kian Tiong as Chief Risk Officer
PU
10/24DBS Group Holdings Announces Executive Changes
CI
10/20Chinese Shares End Lower; Two Shenzhen Debutants Post Double-Digit Gains
MT
10/20SHANGHAI STOCK EXCHANGE B SHARES IND : Global Banks Cut China's 2021 GDP Growth Forecast o..
MT
10/19DBS : Bank (Hong Kong) Limited and Postal Savings Bank of China Co. Ltd announce partnersh..
PU
10/18DBS : Bank named as co-sponsor for SNPC Athletes Achievement Awards
PU
10/13DBS : Bank DBS Indonesia presents DBS MAX QRIS to strengthen digital corporate banking cap..
PU
More news
Analyst Recommendations on DBS GROUP HOLDINGS LTD
More recommendations
Financials
Sales 2021 14 614 M 10 860 M 10 860 M
Net income 2021 6 648 M 4 940 M 4 940 M
Net Debt 2021 - - -
P/E ratio 2021 12,1x
Yield 2021 3,73%
Capitalization 81 005 M 60 138 M 60 194 M
Capi. / Sales 2021 5,54x
Capi. / Sales 2022 5,21x
Nbr of Employees 32 341
Free-Float 98,6%
Chart DBS GROUP HOLDINGS LTD
Duration : Period :
DBS Group Holdings Ltd Technical Analysis Chart | D05 | SG1L01001701 | MarketScreener
Technical analysis trends DBS GROUP HOLDINGS LTD
Short TermMid-TermLong Term
TrendsBullishNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 21
Last Close Price 31,49 SGD
Average target price 33,59 SGD
Spread / Average Target 6,66%
EPS Revisions
Managers and Directors
Piyush Gupta Vice Chairman & Chief Executive Officer
Sok Hui Chng Chief Financial Officer
Lim Huat Seah Non-Independent Non-Executive Chairman
Jimmy Ng Chief Information Officer & Head-Operations
Chee Kin Lam MD, Head-Legal & Group Compliance Officer
Sector and Competitors