OCBC’s New CEO Faces Unique Challenges
(Bloomberg) — As Tan Teck Long steps into the role of chief executive at Oversea-Chinese Bank, one significant hurdle lies in navigating the expectations of the Lee family, its billionaire shareholders.
For nearly a hundred years, the Lee family has been the largest stakeholder in this key Southeast Asian bank. They have historically kept a close grip on finances, favoring cautious spending over major investments to conserve capital, according to sources who wish to remain anonymous.
Though Tan, who recently took the helm, faces a competitive landscape—especially with rival DBS Group Holdings gaining traction—the pressure to act is immense. Notably, investors have been urging the bank to pursue acquisitions aggressively and enhance dividends, paralleling DBS’s strategies.
“Teck Long has to strike a balance,” remarked Gerald Lee, a former investment head at OCBC. “While there’s a demand for transformative change, I think major shareholders may lean towards a more conservative strategy.” Gerald has no familial ties to the Lees.
It’s a tricky situation, especially given that about half of the Lee family’s estimated $38 billion fortune is tied to their 28% share in OCBC, which generates over $1 billion annually in dividends. These funds also support numerous philanthropic activities.
Any risky maneuver could jeopardize this wealth. Reports suggest that plans for substantial investments have stalled in recent years, mainly due to the family’s reluctance to proceed without solid justification. This hesitance has led to the cancellation of initiatives like the S$2 billion renovation of OCBC’s aging headquarters and a failed attempt to acquire Great Eastern Holdings’ insurance business.
Mr. Lee declined to comment further on these matters.
In his initial remarks to Bloomberg, Tan expressed confidence in board support, emphasizing his excitement about driving growth. “Change is essential at OCBC, and we have a culture of innovation that thrives at every level,” he noted.
The Lee family has engaged in significant acquisitions before, but in recent years, their approach has been marked by caution. Competitors like DBS have been more proactive; for instance, they acquired Citigroup’s Taiwan Consumer Bank this year. OCBC, however, chose not to pursue similar opportunities, judging that such assets didn’t align with their strategic focus.
Decisions of any magnitude still hinge on the family’s approval. Recently, Mr. Lee Thie See was pivotal in recruiting Tan, as he chairs the Executive Committee that influences strategy. His family’s history with the bank dates back generations, tied to various successful ventures and consolidations that shaped OCBC into what it is today.
The family has shown reluctance when it comes to banking matters. Lee Tih Shih, the current family director, took on the role somewhat reluctantly, feeling bound by family duty rather than passion. This sentiment was echoed in the past by his predecessor, who assumed leadership in a crisis.
Interestingly, Lee Tih Shih manages a dual career in academia while also overseeing family affairs at OCBC. His extensive qualifications only add to his complexity as a leader in a family business deeply intertwined with its operations and investments. Yet, tensions are surfacing, particularly around the bank’s dividend policies that currently favor DBS’s offerings.
While many family members benefit from OCBC shares, none are intensively involved in daily operations, often leading to disputes over investment strategies. Financial expert Yupana Wiwatanakantan highlights that successful family businesses must often select a clear path—active or passive engagement—something that seems muddled at OCBC.
As Tan fully engages in his leadership role, he will also have to navigate dynamics with Andrew Lee, the non-executive chairman who has been influential since assuming office. Tensions between Wong, the previous CEO, and Lee had been notable, making the transition more complex.
Andrew Lee’s hands-on approach has been recognized widely, with previous plans to take Great Eastern private stalled amid shareholder resistance, creating a cycle of frustration for many involved.
As the situation evolves, Tan’s mandate will be to energize OCBC, with a strong focus on its core markets while adopting modern technologies. Yet, the crucial question remains whether he can secure support from the Lee family for transformative changes, especially in a climate where past attempts at innovation faced obstacles.
Analysts like Lena Kwok from Bloomberg Intelligence have noted that OCBC’s future will depend on clariying the use of excess capital, but the timeline of Tan’s debut strategy remains uncertain. With upcoming earnings reports, investors will be watching closely to see the possible directions he might take.
