4 Key Insights from Oversea-Chinese Banking Corp Limited’s Chief Executive Officer

Oversea-Chinese Banking Corp Limited (SGX: O39) is one of the three major banks in Singapore and also counts itself as the oldest bank in the Garden City.

The bank has operations in 15 countries and counts the S$9.4 billion insurer Great Eastern Holding Limited (SGX: G07) as one of its subsidiaries.

Given OCBC’s long history and heft, there may be interesting things to learn from it.

Recently, Samuel Tsien, the bank’s chief executive officer (CEO), was featured in an interview series by bourse operator Singapore Exchange Limited (SGX: S68). I had picked out four key insights from the interview that may be useful for investors.

1. Tolerance towards mistakesclick here

2. Managing uncertaintyclick here

3. Thinking international, but not global

“These investments are all in our four core markets of Singapore, Malaysia, Indonesia, and Greater China. Our strategy has been about broadening and deepening our presence in these markets – we’ve never veered away from that focus…

… We are international in that we have offices and branches to serve our customers from our core markets when they are in different parts of the world, but we don’t have to be a local bank in every spot just like global banks.”

Tsien had a precise definition of what an international bank represents. OCBC’s investments in Indonesia’s NISP, China’s Bank of Ningbo, and Hong Kong’s Wing Hang bank signifies its focus on its four core countries. There are branches in other parts of the world, but it is mainly for customers from its core markets.

4. The Wing Hang effect

“Wing Hang’s deposit franchise is primarily in Hong Kong dollars – which is US dollar-linked – and US dollars. The franchise substantially increases our US dollar funding base, which is the most dominant currency for international trade and capital flows.”

Speaking of acquisitions, the Wing Hang bank takeover in 2014 serves several purposes for OCBC. First, it diversifies the bank’s US dollar funding base. Second, it gives OCBC a wider geographical reach; to this point, the Greater China region had  accounted for 20% of OCBC’s pre-tax profits in the third-quarter of 2015, up from a single-digit percentage figure a few years ago.

Third, Wing Hang also gives OCBC a leg up on the Pearl River Delta of China. Tsien believes that the region holds significant promise, citing that its economic size is on par with that of Indonesia.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.