The bank’s profits fell 38 per cent in the third quarter of this year as losses from bad debts quadrupled.
DBS is also in the process of offering millions of dollars in compensation to customers who had bought Lehman Brothers-linked products about 18 months ago and subsequently lost all their investments.
DBS is also in the process of offering millions of dollars in compensation to customers who had bought Lehman Brothers-linked products about 18 months ago and subsequently lost all their investments.
At least 4,700 customers in Singapore and Hong Kong invested a total of S$360 million (US$235.5 million) in the products. Following the US firm’s collapse, these investors became angry at DBS for advising them badly on the products and exposing them to risk in the first place.
Last month, DBS also carried out its biggest-ever cut to its 15,000-strong workforce. The bank slashed six per cent of its workforce from its offices in Singapore and Hong Kong to reduce operating costs. To compound matters, executives and staff have also been given pay cuts in the form of lower year-end bonuses.
Sources have revealed that the bank’s marketing team is also in the midst of an upheaval following the layoffs. That news comes as three creative and media pairings - MPG with Euro RSCG, PHD and DDB, and Mindshare with David Communications - are currently in the running to become the bank’s agencies-of-record.
DBS’ media business is split between Mindshare, which handles the bank’s consumer media account, and PHD, which takes care of its corporate media account, while Ogilvy’s David Communications oversees the bulk of its creative output.
The review, due to conclude at the beginning of next year, casts doubt on its current strategy, built around the strapline ‘Living, breathing Asia’. The pressure is now on to find a way to restore consumer confidence and get the business back on track.
Fact box
- DBS’ profits fell 38 per cent in Q3 as losses from bad debts quadrupled.
- The bank is offering S$70 million (US$48.5 million) in compensation to customers who had bought Lehman Brothers-linked products and had lost their investments.
- DBS carried out its biggest ever staff cut in November as 900 workers were sacked in Singapore and Hong Kong to reduce costs.
Richard Leong, regional director, Lowe Worldwide
By branding itself as ‘Living, breathing Asia’, DBS tightly associates itself with Asia’s dynamism as well as acknowledging the passion, commitment and can-do spirit in each of its 14,000 staff.
When we think of Asian values, we think of our concern for the welfare and collective wellbeing of the community. There is an obvious disconnect with DBS’ behaviour in cutting jobs when the bank is still on a growth path and making a profit. DBS needs to uncover its core corporate values. Many successful brands have values that shape the decisions and behaviour of its people. Nokia’s respect for the individual and Johnson & Johnson’s emphasis on giving its employees a sense of security are excellent examples.
DBS should also ask itself whether it wants to continue its tight association with Asia. If yes, it has plenty to do to close the gap caused by its recent behaviour.
The socio-economic crisis should revolutionise management thinking towards greater social responsibility and sustainability. Instead of serving the greed of shareholders, business should strive to serve the community and employees. Business should make a fair profit but it should never do so at the expense of the people it serves.
Francis Wee, founder, Religion Singapore
DBS was severely affected by the collapse of Lehman Brothers, and brutally accused by investors, especially retirees who lost their savings. Singapore’s labour minister, Lim Swee Say, also criticised DBS’ decision to cut 900 jobs.
While DBS is frantically managing all these crises, its branding campaign, ‘Living, breathing Asia’ featuring its staff in the ads, needs to be rethought, reassessed and repositioned strategically, to avoid more doubt and criticism about DBS being a people’s brand. For DBS to regain its confidence level among consumers and stakeholders, the best remedy is time.
Meanwhile, it can start to look at other ways to improve its banking and customer services. Instead of looking for a new creative agency to develop another branding campaign, perhaps DBS can change its strategy by rebuilding its brand through one of its products - credit cards, for exampe.
It could offer more useful privileges so its card members can truly benefit by easing their spending on necessities during the tough times. It’s a genuine way of showing DBS’ sincerity and appreciation to its customers.
Ultimately, time will determine which bank the people will be putting their hard-earned money in.
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