With the last few years proving turbulent for some in the banking sector, hindsight has shown the importance of prudence, a measured approach and playing to your strengths.
“Rather than going global, we think it is better to be more focused,” says Samuel Tsien, group chief executive officer of Singapore-headquartered OCBC Bank. “As a matter of fact, more and more institutional investors would rather you have a very clear strategy as to what you want to do, where you want to be, and how you leverage your core competencies.” ,” says Samuel Tsien, OCBC’s Group Chief Executive Officer. “Under Basel III rules, there are constraints on capital and liquidity. These key resources can be put to more efficient use by going to fewer countries where you can build scale and deepen penetration.”
The advantages of a global bank are not as strong as before, he notes. Regulators have taken steps to ring-fence liquidity – in many countries, the local subsidiarisation of retail operations is required – limiting the ability of global banks to move funds around. They are also asking banks to ensure that they have control over support services, making it difficult to offshore these services in the form of hubs that serve a number of countries.
Samuel Tsien, group chief executive officer of Singapore-headquartered OCBC Bank, believes that Asia is still on track to perform well. “In the short term, what you are currently seeing is a correction of the excesses of the past caused by the artificially low interest rate environment which resulted in the misallocation of capital,” Tsien says. “At the same time, the transformation of the mainland economy is running into some challenges, but China has the ability to ride this out and be a more sustainable engine of growth going forward.
OCBC, for its part, has kept its focus on four markets: Singapore, Malaysia, Indonesia and Greater China. The bank, which has over 29,000 staff, focuses its corporate strategy on strengthening competencies in funding diversification, investments in technology and people, and disciplined risk management. It does this while growing its core business areas: commercial banking, wealth management and insurance.
Tsien believes that the prospects for Asia remain strong. “In the short term, what you are currently seeing is a correction of the excesses of the past caused by the artificially low interest rate environment which resulted in the misallocation of capital,” he says. “At the same time, the transformation of the mainland economy is running into some challenges, but China has the ability to ride this out and be a more sustainable engine of growth going forward.
“Once this period of adjustment is over, we feel the global market will continue to grow, and Asia will probably grow faster than the global average rate of expansion. Therefore, investing for the future beyond the immediate cycle is important. The market will adjust to what is currently happening, and will be able to move forward.”
Born in Shanghai, but raised in Hong Kong from the age of four, Tsien absorbed the rudiments of finance from his father, who worked in the US securities industry. He studied economics at the University of California, Los Angeles, graduating in 1977 with a choice of four good jobs back in Hong Kong.
Opting to join Bank of America (BoA) as a management trainee, Tsien began a steady ascent which, ultimately, saw him staying with the organisation for over 20 years. A branch manager by 28, he went on to head up trade finance, ship financing, and corporate banking respectively, before being transferred to the bank’s head office in San Francisco in the late 1980s to work in a team servicing customers in the hi-tech sector.
Tsien had initially wanted to work for a few years before getting an MBA, but found that he preferred working to studying. With his career developing well and the different exposures that he was given, the study plan was shelved.
When BoA acquired Security Pacific Bank in 1992, he took on the role of chief risk officer at Security Pacific Asian Bank, which was subsequently renamed Bank of America (Asia). He was promoted to president and CEO of Bank of America (Asia) in 1995. After a 12-year spell as its chief executive, he saw the organisation sold to China Construction Bank (CCB). After a stint as CCB (Asia)’s president and CEO, the opportunity for a brand new challenge emerged, which came in the form of OCBC’s offer to relocate to Singapore in 2007.
Born in Shanghai, but raised in Hong Kong from the age of four, Tsien absorbed the rudiments of finance from his father, who worked in the US securities industry. He studied economics at the University of California, and then joined Bank of America (BoA) as a management trainee.
He began a steady ascent which, ultimately, saw him staying with the organisation for over 20 years. A branch manager by 28, he went on to head up trade finance, ship financing and corporate banking respectively, before being transferred to the bank’s head office in San Francisco in the late 1980s to work in the hi-tech sector.
When BoA acquired Security Pacific Bank in 1992, Tsien took on the role of chief risk officer at Security Pacific Asian Bank, which was subsequently renamed Bank of America (Asia). He was promoted to president and CEO of Bank of America (Asia) in 1995. After a 12-year spell as its chief executive, he saw the organisation sold to China Construction Bank (CCB).
After a stint as CCB (Asia)’s president and CEO, the opportunity for a brand new challenge emerged, which came in the form of OCBC’s offer to relocate to Singapore in 2007.
“OCBC was really in the growth mode at the time and wanted somebody who had more international knowledge to join. It’s a big and regional organisation with significant market capitalisation and in the growing stage, so I decided to take up the challenge,” says Tsien, who began as head of global corporate and commercial banking before assuming his present role as group CEO four years ago.
In today’s fast-paced environment, the key task is balancing growth with consolidation, market presence with shareholder returns, and online innovation with over-the-counter services.
Change is inevitable, but managing it successfully is a matter of maintaining standards while remaining receptive to different influences and ideas. The millennial generation, for instance, requires a different approach from an HR perspective.
“What it is that drives younger people in their career aspirations could be different from what drives the people who have been working for 20 years. For the younger generation, we have to do more motivating and less monitoring to get the best out of them.”
As part of its drive to recruit and retain the talent it needs, the bank is currently taking a closer look at its employee value proposition. “These are the values we promote to make sure we know what drives our employees to stay with us and new talent to join us, so that we always have the best talent pool to move us forward,” Tsien says.
Feedback from an annual employee engagement survey also plays a big part in directing change. The comments and critiques provide a valid gauge of what the bank is doing right, what needs to be improved, where progress has been made, and where gaps exist.
The questions vary each year and might ask, for instance, if individuals would recommend the bank as a place to work and if they are kept fully aware of major developments at the bank. Each department is then required to study the collected results and, after due discussion with the departmental staff, an action plan is developed and shared with all.
Engaging employees with sincerity is a fundamental leadership attribute that Tsien believes in. “It is important to recognise that you do things through people. You have to approach people with sincerity because you need their honest views and you need their input. You need to work with them to move the organisation forward,” he says.
The changes brought about by technology are also closely watched – the emergence of fintech companies being one such. If the bank makes investments in this area, it would be in suitable fintech companies or technologies that can help it achieve new efficiencies or offer better service for its customers. As an example, it would like to explore if cloud computing can be leveraged as a cost-efficient channel to store data securely.
“I used to head up a hi-tech group for Bank of America in San Francisco, so dealing with technology doesn’t scare me in that sense,” Tsien says. “As the CEO, you don’t need to understand the technical aspects of the technology. But you need to have enough knowledge to understand the trends and ask the right questions.”
This article originally appeared in the May-June 2016 issue of Banking Today, the official journal of the Hong Kong Institute of Bankers.
This article appeared in the Classified Post print edition as Fiscal foresight.
