atans1

DBS:Takeover target?

In Banks on 14/10/2010 at 5:16 am

Could DBS be a takeover target for StanChart? The latter has just launched a 3.2bn sterling rights issue which would make it one of the top 20 banks by market cap. Temasek would surely be glad that one of  its best performing investments relieves it of a dog of an investment. StanChart is itself the subject of talk that JPMorgan wants it.http://atans1.wordpress.com/2010/09/22/stanchart-a-takeover-target/

The only advantage for StanChart to own DBS is that it will finally have a market where it is the dominant player. It has never had a market where it dominated, unlike HSBC which parlayed its dominance in HK into being a global player.

As to DBS’s other biz, they are dross compared to similar biz owned by StanChart.

BTW, DBS is late to another party.

In June DBS Group annced that it was looking looking to expand its Global Transaction Services (GTS) biz by doubling its current annual revenue of S$800 million in less than three years.

The newly appointed, Thomas J McCabe, managing director of Global Transaction Services, said the expansion will be carried out in a two-pronged approach.

This involves both building on its current Internet banking platform for its corporate clients and grooming GTS staff to meet their clients’ growing needs.

The bank is investing S$9 million on a new technology platform, including smartphone applications, to make its Internet banking service more functional.

The problem is that this biz which covers such services as corporate cash management, foreign exchange, trade finance, global custody and hedge-fund administration, is the new in-thing for much bigger and experienced banks because it provides steady income and is not too capital-intensive,. Some banks have moved investment bankers into this dull biz.

Looks like DBS has not changed, moving late into a fashionable biz where it has no special expertise. BTW Merrill Lynch and Citi had a reputation of moving late into biz where they had no special skills. Subprime is a classic example. Here’s an article on Citi’s latest possible folly: spending on new biz. Remember many of DBS’s FTs are ex- Citibankers, as is OCBC’s CEO. Only UOB is run by a true-blue S’porean.

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  1. Clearly the writer has no appreciation for transactional banking services. Investment banking and selling dull debts are so 80’s. Finance world is all about following where the money is. Right now, transactional banking businesses are where the money to be made. Keep up with the times, bro

    • Ah yah. HSBC, Citi, StanChart,JP MorganChase, BoA, even MayBank all been doing this since I started work in the late 70s. It was called cash mgt services. DBS only discovered this now? When every dog and his mother wants to be in this biz?

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