Money

DBS enters into Chinese market

By Zhou Yan (China Daily)
Updated: 2010-12-16 10:40

DBS will take over commercial, retail operations of RBS in China

SHANGHAI - Singapore-based DBS Group Holding, Southeast Asia's biggest bank, announced on Wednesday that it will take over Royal Bank of Scotland (RBS) Group Plc's retail and commercial banking portfolios in China.

Under an agreement signed by the two banks, Edinburgh-based RBS will transfer approximately 25,000 customer accounts in Shanghai, Beijing, and Shenzhen to DBS, subject to customer approval.

About $900 million of deposits will be added to DBS if all affected customers choose to be with the bank.

"It's a transfer move for free, DBS will not pay any cash for the deal," said Melvin Teo, chief executive officer of DBS China, in Shanghai.

"We're confident that 70 to 80 percent of affected customers will transfer to our bank," Teo said.

The transaction, expected to be completed within six months, will help DBS China rapidly expand its customer base in retail banking, and reduce its deposit-loan ratio to 70 percent from the current 79 percent, the Singapore-based bank said.

"RBS made a strategic decision in February 2009 to focus on the wholesale banking business in the Asia-Pacific region. Our exit from the retail and commercial banking businesses in China is in line with our strategy," said Charles Li, country head for RBS China.

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RBS, which was caught up in the global financial crisis, has been undertaking a restructuring process after obtaining funding of 45.5 billion pounds ($71 billion) from the British government.

"China remains the core market for RBS, as a leading wholesale bank globally, we'll continue to provide services for big companies and institutional customers in China," the bank said.

Buoyed by the transaction, DBS plans to double its staff in China to 2,000 in 2011. The transaction will affect 600 RBS employees, according to Teo.

"At this stage we do not know how many staff will transfer to DBS or continue employment with RBS. As with any exit from a business there may be job reductions," RBS said.

DBS has doubled its staff to 1,000 in the past three years, and has seen a five-fold increase in its customer base since May 2007, when it established a locally incorporated subsidiary in China.

"By the end of 2013, we plan to have 50 branches across China, particularly in large cities, including Shanghai, Beijing, and Guangzhou," Teo said.

The Singapore-based bank now operates 16 outlets in eight cities in China, and a new outlet in Hangzhou, Zhejiang province, is to open by the end of this year.

Piyush Gupta, CEO of DBS Group Holdings, said in September that the lender plans to generate 10 percent of its revenue from the Chinese mainland, up from the current 3 percent, within 10 years.