How is Piyush Gupta to be placed after DBS Bank-Laxmi Vilas Bank deal?

On November 5, at an analysts’ meet after DBS Group’s third quarter results, Piyush Gupta, its chief executive officer, said: “This is going to the best year we’ve had in India in a long time, partly because the rest of the banking system is on the back foot somewhat”. And added: “We cleaned up our book some time ago and because we have both capital and liquidity, we’re able to have a strong year in India.”

Within a fortnight, the Singapore-based bank gobbled up the 94-year-old Laxmi Vilas Bank (LVB) for a song — just three years after DBS made its first pincer move and opted for the Reserve Bank of India’s route of establishing a subsidiary in India (the State Bank of Mauritius being the other). This “local incorporation” promised “near-national treatment” from the banking regulator on a par with local private banks here; and local listing is an option, though not mandatory. On March 4, 2019, the locally incorporated wholly-owned subsidiary, DBS Bank India Ltd, was formed.

One-and-half-years later, and in one fell swoop, DBS Bank is now the largest foreign bank in the country in terms of branches — 556 in all; Citibank remains in pole position when it comes to book size. India is a key market for DBS Bank, and its acquisition of LVB will give it more than a toe-hold in the south of the country and add heft to its small-and-medium enterprises exposure. Of course, given its “Digibank” strategy, LVB’s branch network may be rationalised. But these are granular issues that will be addressed over time.

Gupta, 60, can rightfully bask in the glory he has achieved for his bank in the subcontinent. Now, it can be argued that being an Asian bank, DBS understands the economies and businesses of the region better. Of course, this overlooks the fact that several foreign banks have been around for long enough. Standard Chartered Bank’s (StanChart) and HSBC’s residency is over 150 years; Citigroup’s is at close to 100 years; and the likes of Bank of America-Merrill Lynch’s, Deutsche Bank’s and BNP Paribas’s have been in India well over 50 years. Incidentally, the DBS Bank’s bonanza comes just after the silver jubilee anniversary of its operations in India — 26 years to be exact. 

A Delhi boy, educated at St Columba’s and St Stephens, Gupta had held senior positions in banking across Asia (India included) before joining DBS Bank as its boss in 2009. A school friend remembers him as being “into debating, arts and culture”. “I am not saying that he was into theatre or something like that,” he recalls, “but yes, he was deep as a person.”

But Gupta wears his position lightly. When RBL Bank’s first branch was inaugurated at Gopal Das Bhawan at Barakhamba Road in New Delhi in the winter of 2012, Gupta walked in and stayed on till late. “He needn’t have bothered to turn up, but he did. He’s not one to mix the personal with the professional at all,” says a banker. And when a friend had a paralytic stroke at a party in his house in Singapore, Gupta ensured he was looked after well and accompanied him back to India. 

How is Gupta to be placed after the DBS Bank-LVB deal? His peers in foreign banks will have to revisit their India play, especially the local incorporation model. Will LVB turn out to be a case of biting off more than you can chew? There is also the question of possible court cases from unhappy shareholders in LVB and the thwarted suitor Clix Capital. So the Singapore man can relax with a bowl of laksa — but only for a while.