It will have to be Mike Denoma or Francis Rozario only (that DBS leadership change again)

In the matter of Jackson Tai’s replacement, after I wrote my tome on leadership in the industry (previous blog, edited several times), I was so disgusted with myself for having commented on a lemon list that was provided by an equities analyst from Credit Suisse who was just making wild guesses based on whatever little she knew.

I was travelling so much out of Singapore at that time that I had come to rely on what I was reading in the newspapers, and the international media was just taking their cues from an analyst just because she was an analyst! It’s a form of institutionalised stupidity that exists in the information industry. Looking for someone to quote, reporters, whose job should it is to have a feel of the ground and report authoritatively from it, abdicate their role to this insipid animal called “analysts” as if they are supposed to be any more intelligent.

I can assure you that I have a much higher expectation of my researchers. I tell them that there is no substitute for having that ability to pick up the phone and have real access to real people. I have come to have considerable respect for “ground speak” and consider it carefully when making my own assessment. But damn, this original list that was going around did not come up from “ground speak”.

In the absence of any other indicators, the Credit Suisse analyst was just superimposing how the SingTel leadership transition was managed on to how the DBS on would turn out. After I returned to Singapore for a short while, spoke to some people, and then spoke to even more people…. the selection process that is currently underway at DBS became clearer to me, and then realised that the analyst was just plucking ideas from the air. If she had been one of my own staff, I would have been very unhappy.

Let me now say that in my world, Jeanette Wong and Rajan Raju should not even have been discussed as potentials for the position of CEO. I was just going through the list as it was floating around then.

Don’t ask me why, but the fact that Jackson Tai paraded them at his third quarter results absolutely confirmed to me that they are non-starters. I wasn’t there, but when my staff told me he did that, I immediately knew these were not the people. He may have even told them that they were in the running for the position, but sorry lah, that’s just called buying time.

Not just that, it may have even been a case of DBS actually not having a clue of who could replace Jack, and if that is the case, then we should all be asking if the board was being irresponsible for not taking Jack’s cues for wanting to leave as long as a year ago. We wonder why is Frank Wong in the position of deputy CEO if he is now not playing any meaningful role in the transition.

Having said that, although they are currently going through the charades of an international search, I do know that the person they have had as stand by for the position of CEO for DBS over two years now is Francis Rozario.

Now, Francis has had relevant CEO experience (at Danamon and at senior levels at Citi), but his value has gone up in the area of putting deals together, and that is probably where he is in his own career curve. Anyone who reads the newspapers in terms of the deals that are being put together globally will understand how intricate and complex they are becoming. Both Temasek and DBS need the skills that a Francis has developed. He is astute enough in terms of assessing any banking business in the region that comes up for evaluation (please DO NOT make a mistake on the due diligence you guys are doing on the China one currently underway and buy something out of desperation rather than strategy!), he is globally well connected enough to put the best possible people together and he commands respect for being a focused leader.

DBS’s most immediate needs are not related to its M&A machinery, even if the board would like to think it is. DBS’s most immediate need is to strengthen the revenue generating capabilities of all its business lines, especially the ones it has acquired. Perhaps find synergies with its two most natural partners, Standard Chartered Bank and ICICI. Although there are parties in DBS who would favour greater momentum in the corporate and investment banking side of the business, let me just say that DBS is fundamentally a retail bank. On the day it loses its retail banking momentum, it will be as good as a broken bank for ever. The competition will never allow it to rise from a broken franchise in this highly strung market.

What is important is understanding how the decision making process in DBS (or for that matter any institution) is wired before jumping into with wild guesses. For starters, I know Jack enough to know that he will not recommend putting a lemon in his place. I was familiar with the way he went through more than a dozen names and all sorts of characters before he chose Vince Cook as the CEO of DBS Islamic Bank of Asia (If you travel as much as I do, you will see big names like “Global Bank” and International Bank” in all sorts of small, seedy places – the bigger the name, the smaller the bank, but I digress). The person had to have the gravitas that reflected on DBS perceived self image. So Jeanette out. Rajan Raju out. They should not have been mentioned in the first place.

As my mind raced through all the different people I know and that have been mentioned at the DBS board level, the name that stood out strongest is Mike Denoma, currently Group Executive Director at Standard Chartered Bank.

I had completely forgotten him, and remembered him only when I had to write to him a couple of days ago to complain about something really silly and damaging that his man in Singapore, Ajay Kanwal did recently. I later felt that Ajay was such a waste of time that I should not have bothered.

Now, two days later I remember a more pleasant conversation I had with Mike on a flight to Hong Kong just last year. I could almost kick myself for not remembering the conversation on that flight. I sat with Mike and we talked about everything under the sun, including his passion for fighting child pornography (we subsequently participated in the advertising campaign to encourage banks to stop supporting child pornography as a business by not providing the payment mechanism for such trade). Then towards the end of the flight, I asked him, “Mike, do you think you are ready to become CEO?” and he said “yes.” We were not referring to any bank in particular, just a conversation about ideas. Then I asked what about the fact that you are a retail banker? To which he replied that investment and corporate banking are not things he does not understand as a board member of Standard Chartered Bank.

The things I said that I had said about Lee Hsien Yang in my previous blog entry also applies to Mike Denoma. The real difference between Mike and Francis is that Mike still enjoys running a business, and will make a natural ally to Francis as the later builds opportunities around the region for Temasek, and deals with the harder task of value creation.

One should not be led to feel sorry for Mervyn Davies (now chairman of Standard Chartered Bank) if he now loses Mike Denoma in addition to Kai Nargolwala who had left the bank to head up Credit Suisse Asia only recently. It’s a StanChart thing, four people get groomed to the starting line to become CEOs and then two always leave because they already know what’s going to happen at the finishing line.

Something happens to people who move to London. The city has a way of gentrifying them and making them part of the establishment from where there is no escape. Even his predecessor Rana Talwar fell into that fate! After running into Mervyn several times at the Fullerton Hotel in Singapore where he stays most times he is “in town”, I came to the conclusion that he values his relationship with The Banker in London much more than The Asian Banker in Singapore. I don’t forget promises made.

Only a handful of other names were mentioned internally as being in the running, all unviable. KV Kamath, currently chairman & CEO of ICICI Bank. No lah. Why would he give up his humongous position as statesman extrordinare making such a transformational difference to the second most populous country in the world, in exchange for this small little Hakka-minded “red dot”?

If they are looking in the ICICI direction, one person DBS and Temasek should cultivate for the long term is Dr Nichiket Moir. He is one of the most talented Asians in the commercial banking industry today, if not the most talented, and I don’t think I am exaggerating. Strangely, I have met him only once, but he left a very strong impression on me, and I had had this view validated several times in several ways over the years. Years after I had met him, I met a Korean New Yorker and his American wife at a friend’s party in Seoul and Nichiket’s name came up as someone they knew in New York before he returned to India. They too validated my view of him. Apparently, he was an outstanding PhD student during his time in the US, and gave up the promise of a disgustingly well paid New York job to go back to India to make a difference at a time when salaries were not high at all. I do not know an equivalent all-rounder in any bank in Singapore.

Do I think China has similar leadership material coming up? I spend a lot of time in China and circulate considerably with a wide range of senior bankers. My assessment about the Chinese in the international leadership arena is that as long as China is developing at 10-15 per cent per annum, it will suck in all the international quality Chinese talent back in like a black hole. So, we will not see many of them outside of China. But having said that, it will also neutralise them by making them fat cats in a bourgeoning economy. I saw this happen in the Philippines in the late 1990s, where the returning ex-Citibankers started by saying they will change the system, but slowly became as fat and ineffectual as the incumbents.

The added problem in identifying talent in the Chinese banking system is that banking is technically really state owned and the corporate culture is not something we recognise in a truly commercial setting, and this limits the growth of truly commercially savvy leaders. As state owned enterprises, Chinese banks do quite well. But as commercial enterprises, there is something missing.

The Hong Kong Chinese are sharp and tactical, but leadership of an international bank needs a statesman cum proven tactician mix. Tawan did throw up some very good leaders, but the small and fragmented nature of their banks makes the best still sub-scale for a regional role.

Indians only selctively. ICICI and HDFC are often mentioned in the same breath. But there is also talent in the foreign banks. The state banks are non-starters and worse then the Chinese state banks. In fact, leaders of any kind, only selectively. That is why they are leaders.

My vision for corporate leadership in the financial services industry in the region is that there will arise a critical mass of potential leaders who can lead the industry. I mentioned in my previous blog entry that Singapore needs to enter a phase of its own version of what happened in the UK in the 1990s where it threw up a series of outstanding leaders, who did not necessarily like each other but whose competitiveness created some of the world’s best commercial financial institutions.

I have now met and know all three of them – Sir Brian Pitman, Sir George Matthewson and Sir Peter Burt, in order of decreasing familiarity. I must point out that they were thrown up into the system not by design but by distressed circumstances. Their respective institutions were technically insolvent when they were called to lead them, and lead them they did, and grew them 20-30 fold in a 10-12 year period.

One of the effects of the Singapore government’s “foreign talent” focus is that they have practically pushed aside even the semblance of potential leaders rising through the ranks of the Singapore banking system today. The cost of this is compounded by the cost of learning that they pay through the mistakes of the “foreign talents” they prefer. I am sure that Jackson Tai from the United States of America is now a better man, and that he can say in his CV that he won’t make the same mistakes again, but what does Singapore get in return after he flies home?

If the Singapore Inc’s mindset on this does not change, it should re-register its business as a “School for Foreign Talent” with the motto “We will pay for your mistakes” and in the section that says fees, it should read “Full scholarship for non-Singaporean whites and ABCs, fast track processing for candidates from JP Morgan and Citigroup” in a brochure stamped Uniquely Singapore.

In the 1990s, a small crucible of “Singapore-based” potential leadership talent (includes Singaporean, Malaysian, Westerners and Indians living here) was forming from within the crucibles of the foreign banks in Singapore – Citi, StanChart, (not so much HSBC because the smartest people there are supposed to be British or when in dire need, Australians based in Hong Kong) and some of the European banks, especially Deutsche Bank, as well as UBS and Credit Suisse. ABN Amro was a bit of a joke and American Express was asleep then.

The “foreign talent” policy basically crushed this “crucible of leadership talent” because the decision makers did not even recognise it was there in the first place. Trample the tulip! Singapore has now lost easily 12 years of CEO talent building in the financial services sector because some of the names I know from that era have now become too old to take on positions of leadership and it takes about 10 years for a new generation to become visible. That is how serious the problem is.

The mitigating factor however is that this is probably what happens when a country or an organisation tries to jump start a process. They could not have taken a linear progression because things would not have been upset enough for the system to recognise the discontinuous change required. The temptation though is for politicians or technocrats to keep meddling because they think they understand it this time. Let market forces shape these buggers and that is why I think that fierce competition is good for the system. The true leaders who rise up to change a system do not, like politicians, emanate from a chess game.

The one common thread in the UK of the 1990s is that all its leaders come from within the system. None of this foreign talent nonsense. Ditto Spain today, where Banco Santander, Banco Bibao and Banco Popular demonstrate the same traits of leadership that took their institutions to the next level. Again, from very challenged circumstances. The UK banks have since moved on to another level of becoming global players, which they would not have been able to if not for the work done in the 1990s.

When you study the leadership models in the development of the UK and the Spanish banks, you will find to your horror that it was also tribal. Much of the leadership in banking in the UK is true blue, tight fisted Scottish. Most of the leadership circle in Australia is also migrant Scottish. Many of the people I know at leadership levels in banking in Beijing are Shanghainese. In New York, you will encounter many Jews, but my Jewish friends will argue that it is no longer the case.

Most of the better skilled Chinese leaders in Hong Kong are Shanghainese. In Mumbai, the Uttar Pradesh community dominate the private sector banks and the South Indians dominate the public sector banks because they came in through the civil service. In Jakarta, being Javanese helps and having studied in UC-Berkerly doubles the dose. In Singapore and Bangkok, we find the indomitable Hakka-Chinese, which can be a blessing or a curse, depending on whether you want to maintain the status quo or change it.

To bring in a John Olds into the old Hakka world and hope he will be able to transform DBS has the same effect as the Americans tearing down the leadership hierarchies in Iraq and Afghanistan and hoping their appointees will be able to hold it together. We saw this in his choice of several people who did not stay long. He had his ideas of what the bank needed which did not resonate with the bank’s embedded culture. I make this point because we forget the the primordial instincts that we must tame to get to the next level.

Sure, in the US corporate world, it is not uncommon to find a Jewish CEO followed by an Irish CEO, followed by an Indian CEO and then a WASP CEO. The common thread there is not ethnicity but shared values. Believe it or not, American corporate culture is as prescriptive and strongly conformist as Singapore’s social culture – the message in both is if you don’t like it, you can leave. So, imagine being a John Olds sitting there at the top and not daring to go down in the Hakka-minded trenches because he could just as well been from a different planet. What is worse is that his idea of the kind of skills required to take the bank forward did not resonate with the new people he brought in to make the change. Many left. Think about it – he left as quickly as he could too.

By Hakka-minded trenches, I do not mean that everyone is ethnic Hakka-Chinese. In my definition, (oh, Elsie Foh, you are gonna love this!) the former chairman Dhanabalan is as much “Hakka” as say, Tan Soo Nan, who at one time I thought was a good candidate for CEO of DBS. They subscribe to the same “Singaporean” value system to which anyone new has to get a buy in. Even if Singapore is multi-cultural, the Hakka mindset dominates in business.

If you put Mike Denoma or Francis Rozario into a leadership setting, are they going to be as “Hakka” as the hawker center keeper? That is not the point. The point is that will they demonstrate at least 4-5 of the key Singaporean characteristics such as being prudent (sometimes to the point of being tight fisted), very practical, understand the Singaporean “kiasu” psychic and then to side step it, and how to get things from them. Mike or Francis do not need to be exactly as Dhanabalan or others in their orientation, but something about them must be a continuity in the value system to push on to the next level.

You know, there is nothing that wrong with the Singaporean core culture that we need to feel inferior about it. Yes, you will find people like me complaining loudly about the small minded jerks and losers in the system (another Hakka cultural trait), but generally this is the culture from where we have acquired a global port, a global airport, a global city and so on.  There is nothing wrong with developing a core culture that any outsider will aspire to be part of, and this is what Singapore has failed to do in the past six years when it was in pursuit of foreign talent. There must be something aspirational about the culture itself to attract really good talent to come and deliver what the country needs, not what the foreign talent needs.

To his credit, Jack did go down to the trenches, and he tried. I also think that one of Jack’s more enduring legacy will be some of the people he personally chose. But something always gives when the cultural resonance does not fit. In the case of Jack, the culture obviously did not resonate with his family and even he had to make a choice of whether to stay .

Let me end by suggesting some of the key criteria for CEO of DBS that both Mike and Francis or for that matter anyone should be evaluated against:

1. How much do you want the job? I think Francis would want the job, and Mike I don’t know. But if Hsien Yang does not want the job, please stop floating his name around.
2. How old are you and where are you on the learning curve? Mike is at about early 50s and Francis as well. Both qualify as being at the best time in their careers. If DBS chooses some retiring old fart from the US, may their share price be hit by lightning and singe to the ground! I did think about Fred Enlow who I believe is now with the RBS or Barclays, but I believe he is way past retirement.
3. Are you mentor material? Whoever DBS chooses, the person should be the kind who can be mentor to the next cohort of leaders whom, as I described, will be the real ones to take DBS to the next level. This is a 10-12 year project, not a three year contract. Both Mike and Francis qualify tremendously. They are ALREADY mentor to a generation of leaders strewn around the region and can call on this pool for the different things needed to be done. Mentors should also be really very good themselves, of course.
4. Alliance material? From a Temasek perspective, there is a special need to understand two banks very well – Standard Chartered Bank and ICICI. There is also a need to understand how to merger with the other Temasek franchises to enlarge DBS regionally (eg. say DBS with Danamon in Indonesia). Both these gentlemen do.
5. Proven ability in running an international/regional franchise. Well, let’s just say that I only see Mike on planes, and Francis has so many friends everywhere, that wherever I go, his name keeps popping up.
6. Knowledge of the local Singaporean kiasu mentality and an ability to laugh about it. Both do, eminently. In this regard, please note that I do not see either Mike or Francis as “foreign talent”. They are committed to the region in a way that neither Olds nor Jack will ever be.

I know that I talked about white people and so on – I consider Asian anyone who is rooted here – Chinese, Indian, Indonesian, Korean, Filipino, White, Black, whatever. Let’s make this very clear that the whites or blacks whether from the west or from Africa, who live here are as much “one of us” as any other Asian. An Asia without these “foreign talent” is like a soccer match without linesmen. In a mechanical sort of way, they define us by observing us, commenting on us and participating in life with us. Just don’t parachute someone from another world and expect him or her to help you achieve your dreams.

Now, I want to say that I have no clue if DBS or Temasek are even talking to Mike. I know that Ho Ching knows him well. But if they are not, then somebody better ask them at the next shareholders meeting what happened there. From what I am hearing, Francis is almost confirmed as CEO, which is not a bad deal, except that I really think that the combination will make good sense.

It’s 2 am now. I am not sure why I am writing all this, except to annoy everyone. But I will be happy to provide a briefing to any board that wants a third opinion. It is something that I think a lot about, even as I go about leading my own business and my own little troupe of 60 staff around the region – in other words, I suffer the same issues as I am writing about, so it’s ver real to me. They could ask a consulting firm instead, but they read my blog too.

This matter is too serious to foul up a second time at billions of dollars and then to pretend nothing happened – it is that kind of thing that we cannot allow leaders to do and get away with. By writing this, I am saying we can choose our leaders wisely, because at the end of the day, it is we who put them there. Good night.



  1. The Royal Scotsman

    How important it is to see original and rigorous, not to mention fearless, thinking in the financial media. You are the grit in the oyster that produces pearls.

    Love you or hate you, one thing is for sure, banking in Asia would be poorer without Emmanuel Daniel.

  2. Hey Ed, this is the first time that I am reding your blog. Totally enjoy it! Though outdated, I had to agreed with you about Mike. Great person. wonder where he is now.

    what do you think of Ajay Kanwal at SC? do you think consumer finance business at ABN/RBS (SIN) is a waste of time?

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