DBS's Piyush Gupta: Asia's most disrupted digital banker

SINGAPORE - It’s a jarring moment. Piyush Gupta, CEO of DBS Group is often lauded as Asia’s top financier and has been tipped as a candidate to lead global rivals. The US$62 billion (S$84.5 billion) Singaporean bank is also held up as a role model by Chinese insurer Ping An in its shareholder agitation at HSBC.

Yet following repeated serious failures in its digital banking services, the Monetary Authority of Singapore has banned DBS from non-essential activities including M&A. It puts dividends at risk and will attract the eye of watchdogs overseas where the lender is busy expanding.

It undermines Gupta’s championing over the past decade of DBS as a technology company and adds to a monetary censure slapped on the bank. In May, it was ordered to retain a multiplier of 1.8 times to its risk weighted assets for operational risk, an increase from a multiplier of 1.5 times applied in February 2022.

The higher figure translates to approximately S$1.6 billion in total additional regulatory capital, the regulator said at the time. Though the latest punishment is not financial, there are financial ramifications.

First, fixing the technology problems will require spending. What’s more, MAS has warned it could increase the capital requirements depending on DBS' so far uninspiring progress. Those factors will dampen investors’ expectations of a special dividend after its yearend earnings; the stock fell nearly one per cent on Thursday (Nov 2).

If dividends aren’t raised in line with Citi’s forecasts, analysts there reckon DBS is trading at 5.8 per cent dividend yield for 2023 compared to compatriot OCBC’s visible path to 6.4 per cent.

The bigger issue for the bank is reputational. The digital transformation smoothed DBS’ foray into large markets such as India, where the regulator in 2020 handpicked it to rescue a crisis-hit Lakshmi Vilas Bank, a local lender with over 500 branches.

While that integration and the Singaporean bank’s separate purchase of Citi’s Taiwan consumer business last year are complete, regulators there are likely to pay closer attention to DBS. And whenever it is allowed to resume dealmaking, the bank may also find a cooler reception.

DBS Chairman Peter Seah warned that senior management would be held accountable for the tech lapses including on pay. On the back of record profits, Gupta earned US$11.4 million last year, making him one of Asia’s highest remunerated bank CEOs.

He told Breakingviews in September that he is more interested in becoming a naturalist than taking up another banking role whenever he leaves the lender he’s led since 2009. The shareholder returns Gupta has delivered remain enviable but his tech stripes look less impressive.

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