DBS Avoids Larger M&A Deals

DBS group chief executive Piyush Gupta said it would avoid acquisition targets with large deal sizes in order to maintain concentrated focus on its digital transformation.

According to Gupta, the bank would target deals valued at about five percent of DBS’s market cap (around $3.7 billion as of publishing) and avoid larger ones in order to focus on a digital market he calls «the battleground of the future».

The general thesis for us is that we still think that the digital transformation requires energy and bandwidth,» he explained. If I did a bigger deal and I wound up saying that I’m going to lose two years’ worth of tech work that would be quite a cost to pay.

Piyush reiterated that the bank remained open to acquisitions but noted that the size preference was due a successful track record of «very quick returns» via digital integration, referencing the bank’s $81 million purchase of ANZ’s Asian wealth and retail business in 2016.

We realized that if you get a core customer base at a sensible price, and then overlay our digital capabilities and tools on top of that, it can actually be very accretive, very quickly,» Gupta said. «So we are open to exploring those, but again, it’s a fine call. When does it become too big – one that is going to subsume everything else?

One such financial institution which may qualify for the bank’s taste is Indonesia’s Bank Permata, valued at around $2.7 billion, in which DBS has reportedly expressed interest. Currently, Japan’s SMFG and Singaporean rival OCBC are believed to be frontrunners for the medium-sized lender.