The Development Bank of Singapore Corporate Finance Division Peter Chan December 15 th, 2003
Singapore Based - Universal Banking Model n Growing into other Asian Regions n Traditional consumer and commercial banking contribute stable source of income n Advisory Fees from Investment Banking, Market Making & Trading Revenues provide upside n Key Player in Singapore Capital Markets 2
Specific Issues For the Corporate Finance Division 1) IPOs / plain vanilla bond origination in Singapore is extremely competitive. 2) Strong Retail Investor distribution, but Institutional Investor distribution is key 3) Acquisition of Commercial Banks in the region present cross selling opportunities for corporate finance services n Asset Securitization n M & A advisory services 4) Performance measured at 2 levels n Department: Market Share / League Tables, Revenue Targets n Individuals: Relative to peers & Relative to individual performance targets Productivity is secondary – as long as the job gets done by the deadline 5) Quality Control measures adopted n Internal: Presentation Material (pitch-books), Legal Counsel n External: Subsequent Referrals from Clients for advice 6) Processes vulnerable to operational risk n People Risk: miscommunication with Sales Desk, Credit, absenteeism n Process Risk: financial & legal due diligence, 3
Recommendations / Suggestions for Change 1. 1) “Balanced Scorecard Approach” Financial (Shareholder’s Perspective) 1. Risk-Return approach in undertaking “commoditized” ECM / DCM deals 2. Headcount could have been reduced 2) Customer 1. Expand Institutional distribution capabilities in regional countries 2. Leverage securitization expertise 3. Use balance sheet capability selectively for more profitable transactions 4. Expand client coverage as foreign investment banks have downsized 3) People / Learning Growth 1. Hire key bankers & sales people from foreign banks 2. key bankers & sales people from foreign banks 4) Internal Business Processes n Foster better communication between all internal parties involved 4
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