SINGAPORE, Aug 16 (Reuters) – DBS Group (DBSM.SI), Southeast Asia’s biggest bank, named Sebastian Paredes, a former executive of Indonesia’s Bank Danamon (BDMN.JK), to head its Hong Kong unit which has struggled because of low margins and competition.
Paredes will replace veteren banker Amy Yip who will retire by the end of the year, DBS said on Monday.
The hiring is seen by analysts as a move by CEO Piyush Gupta to inject new direction and leadership at the bank’s second most important market after Singapore.
Last month, DBS reported a S$1.02 billion ($750 million) writedown, the second-biggest since 2005, to reflect the falling market value of its Hong Kong business. [nSGE66S0PL]
Paredes, an Ecuadorian citizen and a former Citibanker, will join on September 13 subject to regulatory approvals, DBS said in a statement.
Gupta, who joined DBS in November from Citigroup, faces a stiff challenge to strengthen the Hong Kong business, a market where the bank has struggled in the past few years following an expensive acquisition in 2001.
“It is quite a competitive market,” said Pauline Lee, an analyst at Kim Eng Securities. “The challenge will be to increase market share as well as improve margins.”
Hong Kong accounted for 21 percent of DBS’s earnings in the first half of the year, while Singapore accounted for about 62 percent. The rest comes from China, Southeast Asia and India.
The Hong Kong unit’s net profit fell 34 percent in the second quarter from a year ago and net interest margins dropped 26 basis points, more than the fall at the group level.
Paredes last worked as president director of Indonesia’s Danamon, which is majority owned by Temasek.
Before Danamon, Paredes spend 20 years at Citigroup with stints in South America, Middle East, Asia, Africa and Europe.
DBS also said it had hired Sim S. Lim for a newly created post of country manager DBS Singapore. Lim left Citigroup in December where he was president and CEO of Citigroup Global Markets Japan.
Gupta wants to expand the bank’s footprint outside Singapore and Hong Kong.
“Our ambition is to be a leading Asian bank with a strong presence in the region’s three key axes of growth — South East Asia, South Asia and Greater China,” he said in a statement.
(Reporting by Saeed Azhar)
