OCBC's Samuel Tsien: “I don't play golf”

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In this up close and personal conversation with Emmanuel Daniel, Samuel Tsien, Group CEO of OCBC Bank, reflected on his journey as a banker, and personality traits that served him well as a leader.

The viewers can join this exciting LIVE discussion Tuesday, 02 March 2021 at 4:30PM SG/3:30PM Jakarta/ 2PM New Dehli/ 12:30PM Dubai/8:30AM London

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The following is the edited transcript of the interview:

Emmanuel Daniel (ED): Welcome to a new series where we come up close and personal with some of the great leaders of the financial services industry in our region and around the world. It gives me great pleasure this evening to have a very personal conversation with Samuel Tsien, currently the chief executive and board member of OCBC Bank in Singapore. We want to shape a conversation that focuses a lot on Samuel, the man, as opposed to OCBC, the bank. But today, we have a very special opportunity to understand Samuel Tsien, the man. I've been very privileged in my own professional experience in building The Asian Banker, in building a new program called Wealth & Society — around the Asia Pacific into Africa, the Middle East, and now Eastern Europe — in being able to become good friends with a number of key professionals, who in their careers have had the opportunity to make that leap from being a professional and then to becoming a manager, and then that one leap that is not open to everybody, to becoming a chief executive. Around the region, there are a few people whose own careers have sort of been parallel with mine and I've been able to see them up close and personal. In fact, the first time I came to know Samuel Tsien, the man, was in Hong Kong when he was the chief executive of Bank of America in Hong Kong. And I still remember the day when he invited me into his bank branch and was very delighted to share with me the digital banking initiative that they had just embarked on. So join me all in inviting and welcoming Samuel Tsien.

Samuel Tsien (ST): Thank you, Emmanuel. If I may start off by thanking you for arranging this last opportunity, in my current capacity as the group CEO of OCBC Bank, to connect with the participants at this webinar, but also to be able to connect with my respected peers, my friends and my colleagues in the industry.

ED: I think that many people know that I'm not one to be very complimentary, without a cause. And I'll say this, that it comes with great rigour in assessing you and assessing your peers, and assessing leadership in general that one of the things that stands out about you is your great consistency. I started this session by saying that it has been my personal pleasure to have seen people make this shift from being managers to becoming chief executives and you are one such person, and you moved to Singapore in 2008. Was that around the time that you made the decision to move to Singapore, and you were a senior manager at OCBC already? Were you already told that it was the track to becoming CEO eventually? Was there a preparatory period? Or was it just a jump into the wild and a journey. At which point did that opportunity to become chief executive of a bank open up to you? Talk us through that experience.

ST: Well, first of all, thank you very much for your kind words at the beginning of this session, about how I'm perceived. I don't perceive myself very well. But from the input from other people, it helps to understand myself better. I joined OCBC Bank from Hong Kong as the senior executive vice president in charge of global corporate banking. It is a major division. When I joined the bank, I was trying to do a good job in the global corporate banking. I know OCBC Bank from the outside, I know, it's got very diversified businesses in insurance, as well as in banking, and it's got multiple presences in different countries. When I joined, I had an aspiration. But there was no guarantee, no sort of verbal commitment at all that I will be able to end up as the group CEO of OCBC Bank. But I tried to do as good a job as possible, utilising my knowledge that I've accumulated from my previous assignments and try to help the bank roll in that respect. I'm very pleased that after four years, I was chosen to be the group CEO. I'm very proud of that. But on the other hand, when I first joined the bank, I was only joining the bank as one of the senior executives of OCBC Bank.

ED: What about you, do you think, made that difference? I think within OCBC, there were a number of people who were as qualified, just as you were. And there were different aspects of the bank. The bank had a strong, SME (small and mid-size enterprise) business and a strong middle market business, and a strong retail business. What about you made that difference, you think?

ST: I think it came from a background where I have been with a fairly large bank, Bank of America. And I have been the chief executive officer of the Bank of America-Asia, covering consumer banking and commercial banking. Subsequent to that, for six months, as the chief executive officer (CEO) for China Construction Bank-Asia. That experience is quite important. Because as a chief executive officer, you basically have to pull everything together. Your functional knowledge about a particular area is less important than your ability to integrate the knowledge and to decide what is best for the bank. I think that helped me to be able to roll into the job that subsequently, I was very pleased to be appointed. And secondly, I think my exposure in the northern part of Asia, particularly in Hong Kong, my knowledge about China, and my previous assignment in San Francisco with Bank of America, all helped to groom myself to have a broader view of things from a business perspective, from a cultural perspective, from an engagement of people perspective. That has helped me to be able to rise into the CEO job, perhaps better. And maybe these points were also valued by the board when they made that selection.

ED: From the time that you were appointed chief executive in 2012, to today, did any of those elements show up in a big difference between 2012 and 2020? Did China become more important to OCBC as a percentage of income, for example?

ST: Yes, very much so. As a matter of fact, when I joined the bank in 2007, the contribution from Greater China, which is not only China, but Greater China, was grouped under Asia Pacific, because it was so small that it cannot stand out as a major contributing area. And at that time, the contribution was around 2% or so. After I took over the global corporate banking job, I was looking at how we can expand our presence in Greater China. And then after I assumed the CEO position, my first overall strategy session was to talk about a diversification that I think is very much required by the bank, because our concentration of earnings were in Southeast Asia, Singapore, Malaysia and we were building Indonesia at that time. And I pointed out, there are two factors that we should take into account. One is that the concentration on Singapore and Malaysia, perhaps, is too much. It was the size 95% of our earnings, and Singapore, Malaysia are closely related. From an economic perspective, any impacts that impacted one country is likely to impact the other country as well. Then the other area that I pointed out is that it was likely that China with its anticipated growth, is going to be a very important contributor of economic activities for itself, for the Southeast Asia region, as well as for Asia. And therefore it was very important for us to gradually move into greater China with a good presence. If there's an opportunity for us to do an inorganic  expansion, I will recommend to the board to do that. And of course, that opportunity came in 2014, when we had a chance to look at Wing Hang Bank, which is a very well run bank formed many years ago. And it was a time where the Fung family decided that maybe they should look for additional partners to come in to take over. I know the Wing Hang Bank family well, we had a conversation. It was a very cordial conversation. And after that we acquired the bank. After we acquired the bank, we used that bank as a base to expand into multiple areas in Greater China, that included corporate banking, consumer banking, our treasury business, our private banking business. Not all of these businesses were directly booked under the Wing Hang Bank we purchased. But it certainly benefited all of the network countries and the network businesses that we had. As of the end of last year,  2020 in our announcement, the contribution from the Greater China region reached 31%. Last year, Greater China’s contribution was significantly higher because prior, it was 20%. But 20% as compared with 2% when I joined the bank is a significant increase. From 20% to 32% was a little bit of an anomaly because last year, I think from an allowance perspective, we were harder hit in Southeast Asia than in North Asia. So that contributed the further importance of Greater China to the OCBC franchise.  Last year, it was actually 31% of our profit before tax was contributed by Greater China.

The value of due diligence in mergers and acquisitions

ED: That's very good to hear because Greater China is not necessarily a profitable play for all players. What was your personal contribution? Did you spend a lot of time building the goodwill, building the franchise in Greater China? Or were you able to find the right people to do that? What contributed to the ability to be profitable? And also this integration with the purchase of Wing Hang Bank, which is as , MNEs (multinational enterprises) are not easy, especially when a bank is not necessarily the largest bank in the country, you end up purchasing the bank and then discovering lots of things that you need to have corrected and stuff like that. What was that experience like?

ST: Maybe I'll talk about the integration first, and I'll talk about what did we do in Greater China that contributed to the higher level of earnings. On the integration side, it is very important, as you said, to make sure that integration is smooth, because you acquire somebody for something that you do not have. And that's something that you do not have is created by the people and created by the original franchise. You should not impose upon what you have and impose it upon the newly acquired entity. It is most important for us to first of all, understand before the due diligence, and during the due diligence, what is it they have, that you do not have. Then after the acquisition, you really need to make an extremely sincere effort to make sure that you protect what they have. And I think we are quite successful in that. You must have the sincere respect of the people, of the way that they have been handling their customers, of their products, of their services, of the customer franchise. That  is very important. And then after that, you try to get what they have into your franchise, and then you try to share what you have with their franchise. That integration is extremely critical for a successful integration. Now, in that respect, I have some experience, which I think helped me because when I was with Bank of America in the US up to 1992, I was called back to Hong Kong because of the acquisition of Security Pacific Bank by Bank of America. And at that time, as some of our peers may recall, Security Pacific Bank has got a fairly important franchise in Asia. And when I was called back to Hong Kong, we were covering that franchise together with an expatriate from the US, who joined me in working on this effort. And that effort was very successfully carried out.  It's my first experience on how to integrate the bank into the larger family that we already have. I also had a subsequent experience, which is on the reverse side, which is I led the sale of the Bank of America's Asia franchise to China Construction Bank, from an operational basis. I did not negotiate the price from an operational basis. And I saw that when you want to sell, you make sure that you understand what it is you were good at, what is that you can utilise the new buyer, and how it can be integrated together.  I was fortunate to have the experience of both sides. And when we acquired Wing Hang Bank and we subsequently did two other acquisitions, Barclays and NAB’s (National Australia Bank) wealth management portfolio in Asia, I think these experiences helped. First of all, you really have to appreciate what the acquired entity has and you make every effort to preserve it, otherwise, the price that you paid would not be realised in your future earnings stream. And then secondly, you must understand what you have. And then you integrate that. That's very important. Back to your earlier question about what is it that I did in the Greater China to increase the earnings proportion to 31% of last year? I would not absolutely attribute it to myself. I would absolutely attribute it to the team that we have, because there were so many facets of the operation that we really needed to make it work in order to generate the additional earnings. And you have to understand yourself and your weaknesses. For example, in China, we were very clear that we won't be able to compete head on with the Chinese banks, because they have the franchise, they have the name recognition, they have the connection, all of which, however hard you do, you will not be able to achieve that. We focused on what is the flow of business that we will be able to capture. Once they're outside of China, our competitive ability becomes much stronger. And as a result of that, I'll be able to compete with the Chinese banks outside of China better than if I were able to do it inside of China. We know their strengths, we know our weaknesses, and then we had to convert what we have to which they do not have. That's a very important area. Then the other area is we built a very good business in wealth management, both on the banking side and under the proper banking arm, the Bank of Singapore, which has an office in Hong Kong. And the team did very well because the SME base is actually a very rich base. But because they are not that highly visible, they are typically not called upon by the major private bankers. We understand that this is a hidden treasure in our portfolio. And we introduced our private banking services research into that base and it was very well received. We are able to create that synergy value, which originally was not in the Wing Hang Bank in terms of product offering but was in the Wing Hang Bank franchise, but it was not unearthed, it was not earthed out. Other private banks also did not know who they are because they are not visible. We try to look at the capabilities, look at what is in it, and then really build it up as a business.

ED: You know, what you have to say about franchise building is perhaps more than all of the technology innovations that are coming into financial services today. It is the single most powerful and important role of chief executive or a protector of a franchise. Now, let me apply what you just said the other way around, you then became chief executive of an existing franchise in Singapore and a very powerful franchise, a franchise which has a history and an amazing legacy and customer base. And sometimes an existing franchise can be its own worst enemy. When someone like you, an outsider, comes into the situation, you do find that you need to work on that franchise and release the energy that it's in it. And some would say that OCBC had that problem. In fact, as you know, at The Asian Banker, we monitor the competition of all of them, key franchise competition in all of the different countries and in Singapore, what’s interesting, is the fierce competition between the three banks: OCBC, DBS and UOB (United Overseas Bank). And there are moments that you lose market share and sometimes you win market share.  From the time that you were CEO, if we just look at the deposit market share, you were 27% in 2012 and 28% today, right? That's very good. I mean, that's small game, but you know you're pushing the envelope a little bit. For housing loan 29% and now 31%. Speak to us about dealing with a legacy franchise in Singapore What was good about it that you needed to hold and what was needed to be worked on about that franchise in a highly competitive environment?

ST: We did not focus on the product sales per se. Product sales is the result of a relationship building.  On the consumer side, because both our customer deposits and the housing loan seem to skew toward the consumer side, our leaders in consumer banking actually look at the way that we can build a total relationship with the customer. We were, through the deposit relationship, very successful to build into a wealth relationship into an advisory relationship, and into a relationship where they will be able to upgrade themselves in terms of what they require from the bank of which they may not even realise, before we engage them. We call it life goals. Life goals is something that we implant into the customer's mind, saying that your requirement is beyond what you currently have. You really need to think through as to what is it that you may require and we will lead you through that. And with that, we are the financial advisor and the solution provider so that you'll be able to achieve those goals as you move along. As we dissect the market, we actually look at the life of a consumer. At a very young age, we will start to bank with them and we work with the government, to which the government has a scheme, where there is some subsidy that will be given to the child once he is born. We have a 60% market share in that particular area. And then we gradually grow with them, into when they're at school, what do they need?  We have a  Frank (by OCBC) product that attracts them and then we move on to another product that once they first go into the workforce, we will find opportunities to bank with them, then the first loan, and as you accumulate some money, we'll move on to wealth management side. We look at it very holistically in terms of what other people require, plus the fact that we have this life goal concept in our mind that will lead you to believe you understand what you need and we are able to provide for what you have. We have been doing this in a fairly systemic manner. And as a result of that, we have been able to establish the total relationship with the customer, rather than a product relationship with the customer. We are doing that quite well. This also applies to our SME sector. We are able to bank with the SMEs before they are incorporated. How do we do that? Because we know they have applied and we will then make sure all of the documents are all ready. On day one of the operation, the account is already open. So that's very powerful, but it's a very meaningful way of making sure that we'll be able to service the customer in the total manner rather than on a specific sales manner. We do it on a proactive basis, rather than responding to a customer's request. This is what we have been doing.

ED: You know, Sam, as a holistic relationship-centric institution, I think OCBC stands out very well. And not only that, you also have your insurance and your asset management and private banking business all integrated. But when we look at your share price, you've always been seen as a laggard compared to the other two banks. In fact, the good thing that can be said from this chart is that at least OCBC sees the share price operate within the range. Where else the other two tend to be a little bit more volatile. Whether volatility is good or bad, it's not up for debate. Did you ever feel that you were being measured? That there was an expectation set on you, there was a competitive element to explain OCBC share price as against the franchise building? And the integrated way in which you were building a sustainable franchise? When you look at a chart like this, did you feel you were being judged , that there’s an expectation being put on you?

ST: First of all, I think that the graph here shows the share price per share. It is better to look at the market cap, primarily because we have script dividends multiple times because we wanted to allow our shareholders to be able to participate in the continued growth of the company by taking their dividend shares, so that increased our share outstanding quite a bit over the past few years. And your slide just now show 2010 to 2020, I guess. That was also a period of time of which we did the rights issue of $3 billion to help the bank to acquire Wing Hang, to fund the Wing Hang Bank’s acquisition. Share price itself, by looking at per share, may not be entirely indicative of the growth that we were able to achieve for our shareholders. If we look at the market cap, I think it will be better. If we look at the past one year, our market cap increased by slightly over 40%. That indicates that the growth is really there. And it's rewarded by the customers, by the shareholders. The other point I would like to point out, is I think our diversification is not yet fully appreciated by the investors’ market. The diversification of ourselves is very broad. We have three business pillars, we have commercial banking, we have wealth management as a separate pillar, and then we have insurance. Now, each of these business pillars will have its ups and downs. For example, our insurance portfolio will be more subject to market impacts than the other businesses. We also have diversification into four countries: into Greater China — now very important for us — Singapore's still the largest market, Malaysia and Indonesia. These types of diversification really helped us in the crisis time, like what we saw on 2020. If we had continued to be a Southeast Asian-centric bank, as we were 10 years ago, this impact on OCBC will be much more than we are currently seeing. Because 2020, our Greater China operations were not impacted by the allowances that we saw in the Southeast Asia region. So from that perspective, diversification really helped. And I think, after we've announced the 2020 results, the market starts to realise this, that the diversification, although sometimes it offsets the earnings, and therefore you will not be able to be as good as if you just concentrate on one pillar. But they realise that at times of toughness, as we saw last year, it really helped a bank to be in a very stable position, in a very strong position.

Strengthening OCBC’s three business pillars

ED: You are now the second largest bank in Singapore. And the diversification that you discussed, I think that's an interesting way to put that. But as I said, the judgment here is not on the bank, it's on you and the leadership that you're providing. In fact, one of the things that I thought when I interacted with you, is the way in which by virtue of personality, you don't exude this idea of being competitive. You do come across as a franchise builder, both internally and on the business front. And I guess that has shown over time and what you explained about your share price, and the growth, and your total market cap, sort of reflects on that achievement that you've had on the bank, in the time that you're there. Biggest regrets, what are the things that you wish that you were able to achieve? That you are now leaving at a time when it's work undone or work done wrongly.

ST: When I talk about the three business pillars, I was hoping that the three business pillars can actually be existent in all of the four countries that we are in: Singapore, Malaysia, Indonesia, and Greater China. We are able to have the complete set of three strong business pillars powering in Singapore. And I can say the same thing for Malaysia. In the Greater China market, we have wealth management and commercial banking, we don't have insurance yet. In Indonesia, we also are just building insurance and our private banking business has just started. I think if we really have a very well-diversified operation, we should have all these three pillars existing in each of the major countries of which we're in. We're still in the building phase. Some of these, we can probably build quicker. Our insurance operation, we can probably build quicker. We would like to see that accelerate its path. So I think although the organisation is very strong now, in terms of diversification, we can be even stronger by making sure that we're able to build these pillars in those countries of which we have a strong presence. I would not look at it as a regret. But I would look at it as something that I would like to continue to see strengthening, so that we can really present a balanced, diversified and sustainable business model for our shareholders.

ED: You know, if anyone else gave me that last sentence that you made, I would be on him by now. I would say that, no, I think that you're using that as an excuse for something else. But coming from you and having dug deep into the numbers, and the franchise that you built, I see that you're one person who means what you want to actually have set out to achieve, and you have. Something that’s very interesting about you, which I did detect in the interactions I've had with you is that you do have a space, in your own mind, in your own time, the time allocation that you have on emerging opportunities in Vietnam, in Myanmar? How does emerging opportunities feature in your thinking? And also maybe we can throw in fintech or technologies and whatever other emerging opportunities that you've identified for yourself? How much of your time do you spend on them? And what are the things that you've been learning in the process?

ST: Quite a bit. I think to identify emerging opportunities, you really have to have a holistic view about what's happening around the region that you have an operation in. Talking to people, particularly talking to your peers, because we have quite a bit of conversation between CEOs across the banks. And as a matter of fact, that is not only the Asian banks, but also the European banks. We have a network of regional members called International Monetary Conference, which is made up of 60 CEOs around the world that we meet once a year. So that's a very good venue. And in the discussion, we don't talk about how good each bank is. But we actually talk about what are the emerging things that we should be mindful of. It is always in my mind.  When we look at what we have done in the past, sustainability, finance, we have built up a very good portfolio. We have set out to do a $10 billion portfolio by 2022. We achieved that in 2020. We’ve now set up a sustainability finance target to build $25 billion portfolio by year 2025. And I'm pretty sure that we will also exceed that pretty quickly. There's a new area that we're not engaged in, we plow in resources to understand what they are, what does it mean? And what does it mean from a financial perspective? And what does it mean from risk perspective? And what does it mean for the wellbeing of the community perspective? And we’ve built up very well. So that's a new area that we were in. Digital transformation is something that we hopped on very early on. And when we talk about digital, many people talk about what are the features you can access for your phone? It's much more than that. It's the front line, it's the middle office, it's the back office. And what is it that we need to do to make sure that the transformation is complete? So that it is something that we can build and we can support processing, we can support customer reporting, we can support unearthing of additional information through data analytics from our own client profile. What is the next best action that we can do for our customers? So a lot of things. So we have spent quite a bit of effort at my level, with my direct reports, with my people in the technology area, to find areas that we can work on. And those areas are not only feature oriented, those areas are really fundamentally oriented. Perhaps the only thing that we can say we're happy about with the COVID event is that it forced the people into an alternative channel, which is the digital channel. And once they are on it, they find that it is actually not that difficult to master, and they stick unto it. Now to us, it's very important because we've made so much investments in the past and they have been underutilised. Once they start to utilise it, I'm able to do the straight-through  processing that is already linked through the origination to the back office. So we’ve reduced quite a bit of costs, as a result of that. And the errors that we sometimes will make once we orient it, before four eyes check that we otherwise would have to do, all these got eliminated. So that is very important. So digitalisation in fighting the gap, as to what we need to do is very important, finding new opportunities. So for example, sustainable financing is very important. Finding new growth markets is also very important. So Myanmar is a growth market that we have identified. It is currently under a bit of unrest and there's a bit of an uncertainty as to where it is heading. But if you step back and look at the medium and long term, I think that country has a lot of potential. Its people are young, its educational standard is quite acceptable, it’s a resource-rich country. And there are a lot of opportunities that our network also wants to go in to build. So we're building that into an Indochina hub for us. We currently have a greater China hub, we have a Southeast Asian hub, which is Singapore based and we tried to see what else we can do in Indochina. So we think about it holistically by looking at the macro trends. And then we decide what is it that we can do? So this Greater China push was not only because of China's growth, it is also actually by looking at the megatrends, the wealth accumulation in China, China's driving of economic activities, their consumer market maturing into a middle class market gradually over time, their push for local consumption. All of these factors come into play when we decide what we want to do. And with that fundamental understanding, then we look at each of the opportunities in the micro basis, but you start off by macro first. See what is the development? What do you need to do?

ED: The purpose of this interview is Samuel Tsien the man, okay. Now let's revisit all these things in terms of you the person, how you manage your priorities. I'm trying to get a mental map of your day, of your week. And maybe the more direct question is that your wife and your daughter live in Hong Kong? Of all the pressures that you have in your working day, how do you prioritise what's important? And don't give me the answers as to what the bank is working on, give me the answers of your day. And out of those priorities, maybe the test question is this, would you recommend your daughter to work in the banking industry?

ST: First of all, although the answer earlier on seem to indicate this as an OCBC answer, but I want to add on to it that I derive personal satisfaction, a sense of accomplishment, together with my team, that I'm able to do the things that I'm able to deliver to my shareholders. So it is not solely looking from a work perspective, it is also looking at from my own perspective. Now, some of you, or the audience may know that I work very long hours, and I do not play golf and I do not drink wine. So the biggest question, therefore is, are you totally stressed out? Or are you able to handle the stress? I feel that I'm able to handle the so-called ‘stress’ quite well. So I also try to understand myself. Why is it that some people, by looking at your life pattern, the work that you do, the hours that you spend, did not result in what people would typically call a stressed out person? I think I've got one personal trait, which I like very much, but it was just born within me. When I do something, I'm totally involved in that thing. So in this conversation, Emmanuel, I'm totally involved in this conversation. Other thoughts do not come into play such as what I'm going to do, if there was a client meeting that's happening or if there's an internal meeting that's happening, actually, no, I'm totally devoted to that. So once this session is over, I will be totally devoted to the next work task that I need to work on or the internal brainstorming session that I need to work on. That I think mentally helps me quite a bit. Because the way to destress is that people want to go from one activity to another. So people work and people play golf, or people drink or people go to the beach in order to enjoy themselves. If you look at it, it's actually a change in activity. I am able to change an activity, perhaps within the confines of what people say is still work related. But if you look at it in segments, this work that I currently do, these things that I will do over the next one and a half hours, will be totally different. And therefore my mind got released from the first task and moved on to the second task. I think that helps me quite a bit. And I am not sure if everybody agrees with me. But to me, how can I explain that I don't think I am under too much stress as people traditionally define it. That's my answer to that. But you never know when it's a real answer. Not until you point it out.

ED: And then the question to ask is, so what do you do for leisure?

ST: I actually try to understand what's happening in areas that has got nothing to do with work, but it is, too, work originated. For example, I'll be fascinated to talk about how long would a rubber tree be able to produce rubber? For a palm to mature? And what does it mean ‘by deforestation’? Is burning the only way? And why do they need to burn it in order to do it? Because it's a hundred times cheaper to burn than to employ the people to cut it. So I find those types of facts, which are partially work related, but I look at it as personal interest related. So I also try to have my thought move into those areas, which I think help me to destress. And I use it as ‘leisure'.

ED: So when I asked you what advice would you give your daughter as to whether or not she should be in financial services or in banking? I'm actually asking you a loaded question. I'm asking you about your sense of what do you think the future of the industry is going to look like? Is this worth it? You know, where the money is? Or should people be doing things that they are interested in? What has your advice been to your own children or to people, to the next generation?

ST: First of all, my daughter studied marketing, so she's not a finance person so it is unlikely that she will join the finance field. She's in product promotion and she's been very successful in that. My view about the financial services industry is that it is the industry that allows you to understand a lot of things that are happening in the market, in the operating environment that you're in. You know, in Chinese, we have something we call the banking industry is the dragon head industry. Because all other industries have some relationship with banking. And if you work in the banking industry, your knowledge about what's happening in the world that you live in, I believe, is much more than if you work in other industries. So from that respect, I would still recommend and encourage people to be involved in banking, because this can give you a broad view about what's happening. And you can put these things into context.

Recovering from the Asian Financial crisis

ED: What are the crises that you've had in the time that you were the chief executive? I think that the point you raised about franchise and in Singapore OCBC having a very domestic and very close franchise with the business community, you cannot help but be close to some of the business leaders, the business personalities in Singapore. And it's sometimes difficult to draw a line between friendship and where business starts and you have to make difficult decisions. Talk to us about some of the difficult decisions that you've had to make.

ST: I think in that respect, there have not been a lot of difficult decisions, so to speak. Because the people that we are close with, even though there's a professional relationship that could be a personal relationship, don't really interact that much. So I cannot recall a particular incident where I have to make a judgment call and whether one relationship will influence the other. So I don't think that actually comes into play. I think the most difficult period that I've been through was still during the Asian financial crisis. I don't know whether you caught some of the comments that I've made to the press that even at the onset of the COVID crisis, I said my assessment is that this COVID crisis, it's going to be very penetrating, it's going to be worse than a global financial crisis that we went through, it's going to be equal to, or even slightly more severe than the SARS (severe acute respiratory syndrome) crisis. But I don't think it will be as bad as what we had experienced in Asia during the Asian financial crisis. So I think coming back to your question, the most difficult time that I can recall in my working career was during the Asian financial crisis. Because that was the time that we were fundamentally weak. And there were parties who took advantage of our weakness to make us even weaker than we had to be. So that was the time that we were very concerned. And that also taught me a good lesson, that the liquidity for a bank is very important. Now I was working at Bank of America at the time, so Bank of America is a global bank, very reputable. So there is no real liquidity issues. But when you talk about local currency liquidity, you always have to master it. So I had the experience of the liquidity being dried up very quickly. And I have to get liquidity from the market at a fairly expensive price. So you learn from that. So we were one of the first to come up with the largest, at the time we called it the FRC Program in Hong Kong to support our liquidity. During that time, we also sold off some mortgages into special purpose vehicles, to raise money from the offshore markets. So you quickly understand what you're faced with. And then you will work on it to make sure that if it were to hit again, you will not be impacted. So learn the lesson early. Understand what was it that cost it? Is it true that you are not well prepared? And if you are not well prepared? What is it that you can do to prepare yourself for the next one? It is very important. And I think in that respect, during the Asian financial crisis, we were hit early on. So in a way, it's a blessing in disguise. We were hit early on, but we were never in danger of bankruptcy because a part of the large bank was never indebted. But you really have to say that is this something that you could avoid, if you want to avoid it next time? What do you do? We are well prepared for that. If you look at our financials at the time, it was under the Bank of America-Asia. It's a licensed bank so we publish our results. During the financial crisis in Hong Kong, Bank of America-Asia was the only bank that was able to report a 2% rise in profits during the Asian financial crisis. All other banks reported significantly reduced earnings, because we prepared early.

ED: And this time OCBC is in the opposite situation where the banking industry is coming out stronger than the rest of the community, society and so on. Is there now a reverse role where governments, and in fact, the Singapore government is putting expectations on the banks to absorb employment and absorb cash flow situations, and so on? And is that role reversed now? And from a position of strength? What are some of the priorities or some of the issues that you're facing right now?

ST: I think it is reasonable for the banks, which are major corporations in the local economy, to provide support to the community. So I'm not only saying that the support in terms of granting relief or moratoriums to our customers. During last year, we also created over 3,000 job opportunities for people outside the bank to work for the bank. Now our insurance subsidiary, Great Eastern, created quite a bit of insurance agency jobs for the people to join the insurance industry. We took advantage of the Singapore United Traineeships Programme to offer opportunities for people to understand what banking is with subsidies from the government, but we still have to devote the resources to it. I think it's reasonable for us as a major corporation in the community to help the community in case of need.

Adding value to Singapore’s growth and wellbeing

ED: Let me ask you another loaded question and only because of time, we go straight into a very deep issue. Why didn't you become Singaporean? And you can answer this question in many different ways because there are a number of issues around this.

ST: I like Singapore. It's a country that I've spent 14 years in. As a matter of fact, prior to coming to Singapore, I was 15 years in Hong Kong. So it's almost matching the last 15 years, it's 14 years in Singapore. And I'm pretty sure that I will probably spend a disproportionate amount of time continuing to be in Singapore because here's the place for the past 14 years, I've known the place very well, I've known the people very well, I like the culture, I like the way that they interacted with me. And I'm very pleased that I have, generally speaking, been accepted by Singapore as one of them. So to me, it doesn't really matter whether you are a Singapore citizen or a Singapore permanent resident. I like the country and I will continue to be spending enormous amount of time in this country, interacting with the local people, making sure that I'm able to continue to be not only remembered but I derive satisfaction from being part of Singapore.

ED: What did you make of all the discussions that were going on in the local community about having Singaporeans lead a Singapore bank and you are very clearly sticking out as one of the CEOs who are not Singaporean, and you sort of need to be quiet? Because they were talking about you and other CEOs who are either technically not Singaporean, or became Singaporean eventually. And it's not just in Singapore. I think that in many countries today, in Indonesia, and so on, having a local person is very important as a matter of identity, assertion of self-confidence as well as opportunity of leadership, right? What were the thoughts that went through your mind as you listened to some of these things? And what were your contributions to that discussion? And I'm leaving it as open ended as possible, because obviously, this topic can be discussed in any way.

ST: Now, first of all, I can understand the comments made by many of the people and I think it is very logical for them to have that feeling. I would look at it from a different perspective. I think we should have resources to contribute to Singapore, contribute to Singapore's economy, contribute to the wellbeing of the people. Where they originally come from, it's just a statistical information. What they were doing, what they are able to do, I think it's the most important consideration for the country. And from that perspective, for myself, who is not originally from Singapore, but I am now in Singapore, doing the things that I'm currently doing, I sincerely trust that I would like to create additional incremental value for Singapore for the wellbeing of the country and the wellbeing of the people. I think we should look at it that way. Where they are originally from is a relevant statistical information, but whether they are able to contribute and to give support to the local economy as they continue to prosper, is something more relevant. So I would look at it that way. But it is very important for us to adopt an understanding attitude. I think I truly understand where and why these comments came from. But if you look at it from a different perspective, it is not where you come from, it is what you do. And if you're able to help Singapore grow, Singapore will have an even higher reputation in the international community. To bring activities into Singapore is more relevant. We will  again look back into OCBC Bank, we find every opportunity to bring activities into Singapore. Look at the trade that we do. Many of the trades have got nothing to do with Singapore, except that we bring them in under the global traders programme by the customers and we process them over here. Wealth management, again, the wealth management business that we do, many of the customers are actually from outside of Singapore. But we only create a booking centre in Singapore. We extend our research and our product support, and our advice from Singapore in order to create employment for Singapore. It is more important for us to make sure that activities are created for Singapore so that everybody can benefit here rather than looking at the statistical information as to where they come from.

ED: But you still have not answered the question. Did it ever strike you to become Singaporean, to change your passport? And if you didn't, how do you think through that?

ST: It was not something that I focused on because I am able to have a passport that allows me to travel. And this can accomplish my mission of making sure that I am able to do the things as good as I can, and to help to bring activities into Singapore. So I was looking at it that way, rather than distinguishing it as a particular document as to where it was issued.

ED: Two questions here. What was your relationship with the board? When I tracked the evolution of the OCBC board, it evolved over time from being very family centric to becoming a little bit more professional and you can identify members of the board who’ve kept a watching brief on behalf of the family. And today, it's a lot more open ended in that the board members are individuals who more or less could have their own opinions. And it's also good to see that the board is beginning to look a little more diverse. It's not Chinese men in a list. So that's good. Now the thing is, to what extent did the board allow you to do the things that you could do? Were there things that the board said no to you? How was your relationship with the board?

ST: Very good. First of all, the organisation is professionally run, it's truly professionally run. Although we have major shareholders, but the major shareholder leave it to management to run the bank and the board also provides guidance but does not directly interfere with the management's actions. Of course all of the material actions, expansion plans, acquisitions are going to do a lot of business, will be cleared by the board. And that's beneficial because the board has got people who are not involved in banking and they will be able to provide us with the input that is necessary for us to put our decisions into a broader context. And from that angle, it actually helps us to make sure that whatever we do is done on a proper and larger context. Rather than focusing on, perhaps sometimes the management may feel that this is something that we'll be able to get some incremental earnings on. But then we have to look at it from a resource allocation perspective, is it worth it? We will make the best judgment and with the additional input from the board, it can actually supplement that judgment into an even better judgment. So the relationship with the board has always been good. We have good interactions with the board. The board members are very diversified. They are professionals with good knowledge and reputation in their own fields, and we interact with them very well. The organisation is very professionally run, it is no longer a family entity at all.

ED: Were there things that the board didn't allow you to do?

ST: I think there are different opinions that were expressed by the board members. Ultimately, we always come to a consensus at what is good for the organisation. So I cannot think of anything that we think should be done, and it's not done simply because of the board. If there are things that we ultimately did not do, it was a decision that was made by the management with the input from the board as to what is necessary to do. What should be done and what should actually be withheld?

ED: Well how involved were you in the succession planning in the bank? I think I've actually tested this question with you several times in the past, like how long will you stay? And who you might be grooming from internal? And how did it result in Helen Wong being appointed the next chief executive? Again, a loaded question, which is what is the talent pool in OCBC? Were you involved in the succession process? Not just now, but from a long time ago, and how did you end up with Helen Wong being selected?

ST: The decision was made by the nominating committee and approved by the board.

ED: Did you give recommendations yourself?

ST: I was involved in the process. And I provided my input as to what I think are the necessary ingredients of a CEO for the bank going forward. There are candidates internally and externally and each one of them have their strengths and we really have to look at what the bank is likely to be going forward in order to choose the right candidate. And for those candidates that we ultimately did not choose, they are still very good. They're still very important for the organisation, or for that matter, for the external candidates that we did not choose, they're still very important for the economy. But we have to look at it in the OCBC context, and what is it that we need to have in order to guide us to the next phase of growth? And from that perspective, I think the nominating committee made the decision and it was approved by the board that Helen be appointed the successor to myself.

ED: Were you a part of the nomination committee? Was Helen one of the people that you had recommended?

ST: I am not on the nominating committee. The nominating committee is made up of all independent directors. So I'm not on the nominating committee. I provided my input to the nominating committee and the nominating committee made their own decision. I was involved in the candidates review as well. But I was not the approving party, nor am I the party that voted on the candidates. It was a nominating committee decision.

Digitalise the process, not the customer

ED: I mean, this is a curious point, because this is a time when Singaporeans are hoping that there will be a Singaporean who would be CEO. And on top of that, the choice of Helen Wong, the skills that she brings in, her own legacy, and the choices that you have internally in the organisation, there are many questions that I didn't ask you like what is your working relationship with your staff. In fact, I had a lot of comments coming back from your staff saying that you are the man who would buy food for the security guards when you came in late at night, and so many good stories and the stories that have come from over the years. So the genuineness of your personality and character just stands out very, very clearly. And for those reasons that I'm taking all your answers at face value, because you've genuinely been exactly who you said you were. And your point about being present is very interesting because you’re always present with me, and you’re also present with the people that you've worked with. Talk to us, there are a few questions here on technology. What is your sense of what technology is doing to the bank? Now I am here in Beijing and the technology is everything. It's tearing apart the banking industry in China. And you know, it's amazing what's happening. And what I thought was very interesting about technology in Singapore, and looking back into Singapore, and seeing how the three banks had imbibed technology. Now it begins to make sense to me that the banks, especially OCBC, UOB and also DBS used to be buyers of technology. Your chief technology officer was mostly a procurement officer who just signed off on an IBM deal. And then IBM would go off to India and get it done and so on. And today, you have to absorb technology, you need to have talent internally. And then you start seeing that the organisation itself changes as a whole. Many of your employees now have to be technology savvy internally, and you have to do your production in-house as opposed to buying it and so on. Talk to us a little bit because there are a number of technology questions coming through right now and I'm trying to consolidate these. Talk to us about what you've learned about how technology is changing the financial institution today. And what you've been learning and what you think are the things that a CEO should pay attention to.

ST: I think one of the guiding principles that I laid down with my management team is that we digitalise the processes, we do not digitalise the customer. The customer still needs to be understood, not only from the data perspective, but also understood from his desire perspective. That's why the life goal comment that I just made, the growing of the total relationship to lead the customer to understand what is it that they should shoot for and how do we prepare for that, becomes important. The most important thing is, we cannot digitalise a customer relationship. We can use all of the digital tools that we have to understand the customer. But ultimately, when you deal with a customer, you cannot digitalise that relationship. It is not a transactional relationship. Because if you focus on a transactional relationship, the commercial banks will lose out because there will always be some fintech companies who are able to do a better job in that monoline activity with the customer. But the customers do not look at it as a monoline relationship when they deal with the bank. They have that trust in the bank which we need to preserve and it is that trust that we need to build upon so that we have a total relationship. Given that, we still have to make sure that we invest into digitalisation because that creates the better experience and the convenience. But that is not the fundamental driver of the relationship. The fundamental drivers of the relationship is your understanding, your care, your service, and the ability to lead the customer to its next goal. When I look at technology, as I mentioned earlier, we should not focus on what people perceive as the front line, we have to look at the back end and you have to make sure that the technology is done in such a way that it is able to build an organisation, which is a more complete organisation than before. In that sense, your ability to unearth all of the information that you have about the customer must be put there for a purpose and the purpose in our case for the consumer is to build a total trusting relationship and for a commercial customer is to make sure that they understand what is the next requirement that they have. It is not a solution that you can buy from the market, it is a solution that you have to bring inside yourself in order to understand what you need to reinforce what you have with the customer. So, I think nowadays, people look at digitalisation as an end. You have to understand that digitalisation is a means. The end is to reinforce that trust that the customer has in you. You understand them and the two of you can come together to define what is ultimately required by the customer. That's very important. We always say whenever we do investments, it has to be a discerning investment. It has to be an investment with an ultimate purpose. What is the purpose? The purpose is not that I want to digitalise the person that is there. What is it that comes along after the digitalisation? And sometimes I felt that this is lost, that we wanted to create this feature because we're the first in the market. But the feature must be accepted by the customers as a convenient feature that they will use. What is the better experience that we were able to do realise, what is the convenience that they were able to achieve? What is the time efficiency and is that important? So put it in the broader context of digitalisation. But my opening comment is very important. We digitalise our processes or procedures, we don't digitalise our customer. Because the relationship is much more beyond the transactional relationship of which the customer wishes to complete a transaction with you. The customer wants to build upon that transaction that he completed with you to do all the things that he can do with you in the future.

ED: This conversation really could go further and longer, we could go on to two hours. And we could go deeper as well. In fact, every single point that you brought up could have gone a lot deeper and I hope that it gives introductory idea to those following you for the first time to get a sense of who you are. Final question is why are you leaving now? And what are you going to do after you leave? You know you've got 14 days of quarantine if you go back to Hong Kong, or is it 21 days now? Also, why today? Why now? Why not wait until the pandemic is over? And what are you going to be doing after you step down?

ST: First of all, I have been serving this role for nine years. And I think it is always good to have a leadership refreshment and a leadership renewal. There will be new ideas that will be able to come from Helen, as my successor. And the chemistry between Helen and her colleagues will also create new opportunities that maybe we have not focused on before. So I think certainly nine years is a good time to relinquish it and to allow a new person to come in. Secondly, I'm also becoming more aged. And as a result of that, I would also want to make sure that I'll be able to do other things that I am not able to do because of the direct work that needs to be involved in. The next question is that what is it you want to do afterwards? First of all, I want to regain control of my time. As the CEO, you would have thought that I have absolute control over my time, as to what you want to do, when you want to hold a meeting. As a matter of fact, as the CEO, there are so many things that has already occupied your role, that your ability to manage time is actually not that much. And I would like to be able to manage my own time after I exit from this current role. And then with the management of my own time, I will be able to identify what are the things that will continue to energise me so that I will not be like a person who is totally disengaged from the community. I still want to be engaged with the community because you derive satisfaction and detail of energy from those roles. So I'm looking forward to those after I've exited. After I leave this role, I will be able to find the time and then I'll be able to sit down and decide what I really want to do, that will continue to propel me.

ED: I'll let you have the last word on that and let you leave with your own words there. But I'll say this, that in preparing for this interview and this conversation with you, it is always my job to make sure that we've covered all grounds and that there are no surprises that might come after the interview or after the conversation that might come out  in contrast. And I must say that the feedback and the respect that you have in the community is amazing. And Angelo Dundee said this about Muhammad Ali, and I'll say this about you as the parting word as well as a form of respect, that you are who you said you are.

ST: Thank you very much.

Keywords: Covid-19, Digitisation, Dragon Head Industry, Mne, Frank By Ocbc, SMEs, Asian Financial Crisis, Singapore United Traineeship Programme, Wealth Management


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