Stanley faces challenges in running Singapore's DBS

By Saeed Azhar

SINGAPORE (Reuters) - For Richard Stanley, Singapore's attraction goes far beyond the realm of his Citibank career in the city-state. He found love on the island, a former Miss Singapore who became his wife.

The romance with the country has lured the 47-year-old American banker to return to work in Singapore for the third time, to run Southeast Asia's biggest lender, DBS Group Holdings (DBSM.SI).

But expanding DBS beyond Singapore and Hong Kong, its two key markets where it earns about 90 percent of its profits, and weathering global credit turmoil will not be easy.

"DBS is not a broken bank," said Matthew Wilson, an analyst at Morgan Stanley. "It is just a Singaporean bank and hence has structurally low growth, low returns, and limited distinctive capability to succeed regionally."

DBS cannot offer the global scale and breadth that the likes of Standard Chartered (STAN.L) and Citigroup (C.N) could offer to regional banks, he said.

"Richard Stanley has no easy levers to pull to improve performance."

DBS is likely to report on Wednesday quarterly profit fell 8.3 percent from a year earlier to S$566 million ($416 million), according to a Reuters poll. Analysts expect it to report lower fees and fresh provisions on its exposure to complex credit derivatives.

But the writedowns would be much lower than last year when it wrote down S$270 million on structured instruments, including debt exposed to the collapsing U.S. subprime mortgage market.

DBS is also facing slowing growth after two years of strong earnings momentum as a looming U.S. recession threatens to derail an Asian economic expansion that enabled regional lenders to withstand the credit crisis last year.

But DBS has put its faith in Stanley, who has spent 18 of his 27-year banking career in Asia, including stints in Thailand, Singapore and Shanghai. His appointment came despite speculation the job might go to Francis Rozario, another ex-Citibanker who works for Singapore state investor Temasek Holdings TEM.UL, which owns 28 percent of DBS.

"As a seasoned banker with a proven track record in Asia, Richard is well-positioned to help DBS grow our regional footprint, diversify our revenue base and focus on higher-return businesses," said the group's Chairman Koh Boon Hwee at the time of the announcement.

His appointment comes as the bank is gunning for expansion in Taiwan where it bought failed lender Bowa Commercial this year, while it is also trying to build a domestic business in China and is increasing branches across India.

Stanley comes with a track record of acquisitions in China, which eluded his predecessor, former JPMorgan (JPM.N) banker Jackson Tai, who resigned last year.

Stanley helped lead a Citi consortium's $3.1 billion acquisition of a controlling stake in Guangdong Development Bank in 2006 and Citi's purchase of a minority stake in another Chinese lender, Shanghai Pudong Development Bank (600000.SS).

DEPARTURES

But even before Stanley stepped into his office on Friday, a string of departures at DBS greeted him.

David Lau, the former head of global markets, is joining a hedge fund and analysts fear he could take some traders with him. Edmund Koh, its former top salesman in the consumer division, left to join U.S. private equity firm Carlyle Group in Taiwan, while chief operating officer Frank Wong is retiring at the end of the year.

"DBS has seen three of its most senior executive depart," Credit Suisse's Sanjay Jain said in a note to clients. "One too many changes at the same time?"

But a person who has worked with Stanley in China sees him as a team player and someone who has the capability of building an international business.

"He was a great builder of franchise in China and very well regarded by the people here," said the person, who asked not to be identified because of corporate rules. "He cared for the people who worked with him and they were also loyal."

Since Stanley first moved to China, Citi's headcount in the country has grown from 150 to more than 3,000 as of last year.

Stanley joined Citi in 1981 and became China country manager in 1999. He took a regional position in Singapore in 2004, overseeing Southeast Asian markets and banking, before returning to Shanghai in 2005 as China CEO.

For DBS he will be working at Singapore's downtown Shenton Way, where during an earlier stint he met his wife, Koh Li Peng, a top model who earned the tag of Miss Singapore in 1984.

"I would walk out for lunch and see her. One day, I approached her and it started from there," Stanley told the local Business Times in an interview in 2004.

Stanley and his wife have three children.

(Editing by Neil Chatterjee)