1. LEADERSHIP. LEARNING. TECHNOLOGY BUSINESS
THE WEEK OF JUNE 17, 2013
Strength overplayed
Would Abraham Lincoln’s leadership
have been more effective had he not
been quite so caring?
Porsche or
Rolls-Royce?
The art of selling a luxury car,
according to Eurokars’
Karsono Kwee
Speed and safety
Akamai Technologies offers
security against denial of service
attacks from hackers
ANZ’s Sanjoy Sen has been tasked to build
a regional retail franchise for the Australian
banking powerhouse. The obstacles look
daunting, but Sen is relishing the challenge.
Start where you are. Use what
you have. Do what you can.
— Arthur Ashe
Target AsiaTarget Asia

2. MW4•THEEDGE SINGAPORE | JUNE 17, 2013
COVERSTORY | BY ASSIF SHAMEEN |
S
anjoy Sen was busy presiding over the
painful restructuring of Citibank’s re-
tail banking business in the Middle East
and North Africa a year ago when a call
came to gauge his interest in growing a
consumer banking franchise across 21 markets
in Asia-Pacific. “My friends all thought I was
crazy to leave Citibank”, just as the troubled
global bank was on the verge of a turnaround,
he recalls. But the more he thought about it, the
more he realised the job he was being offered
was what he really wanted to do. “You don’t get
the exciting opportunity to build a regional retail
banking franchise in Asia every day,” he says.
So, in October, Sen began work as head of retail
banking for Australia and New Zealand Bank-
ing Group or ANZ, with the responsibility for
building the bank’s retail business in Asia.
In many ways, Sen is tailor-made for the
job, having headed Citi’s retail operations in
China, India, the Middle East and North Af-
rica. With a degree in electronics engineer-
ing and an MBA from the Indian Institute of
Management, Sen joined Citi 23 years ago and
worked his way up in Citi to regional roles. Be-
fore relocating to Dubai, Sen was retail bank-
ing head of Citibank China for two years, and
before that, he headed Citi’s retail banking
unit in India. His mandate at ANZ is to de-
velop connectivity across markets to deliver
products and services for customers with do-
mestic and regional needs.
ANZ’s foray into Asian retail banking is
part of its “Super Regional Strategy”. Ever
since Michael Smith was lured from HSBC’s
Asian operations to run ANZ more than six
years ago, the latter’s top management has
articulated an audacious vision to rebuild the
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TargetAsiaANZ’s Sanjoy Sen has been tasked to build a
regional retail franchise for the Australian banking
powerhouse.The obstacles look daunting, but
Sen is relishing the challenge.
bank into an Australia-based, Asia-focused fi-
nancial services behemoth that leverages its
heft Down Under with its growing Asian con-
nectivity. Smith’s stated goal was to establish
“a real franchise” in the region as opposed to
just a footprint that other Australian banks
doing some business in the region have. The
former HSBC Asia chief recruited senior Asia-
experienced bankers — from Citibank, Stand-
ard Chartered as well as his former employer,
HSBC — to grow ANZ into an Asian banking
powerhouse.
ANZ Bank, Australia’s third largest, is among
the top 20 of the world’s best capitalised banks.
ANZ is a core part of the country’s six protected
financial services pillars — four large banks and
two giant local insurers. While rivals Westpac
and Commonwealth Bank are still mostly do-
mestically focused and National Australia Bank
has confined its growth overseas to developed
markets such as the UK, alone among Austral-
ian banks, ANZ has long had a fledgling pres-
ence in Asia. Over the past two decades, it has
expanded in the region, only to retreat and lat-
er expand again. In 2007, Smith arrived at ANZ
and vowed to remake it into a regional player.
It was a clever differentiating strategy as banks
had been giants at home but minnows on the
global front. Ironically, ANZ once owned Grind-
lays, the largest foreign bank in the Indian sub-
continent, which it sold to Standard Chartered
more than 12 years ago. And indeed, Grindlays
once owned Dao Heng Bank, which changed
owners a few times over 15 years before it was
bought by DBS Group Holdings in 2001.
In the aftermath of the global financial crisis,
Smith acquired the Asian retail banking assets
of the UK’s troubled Royal Bank of Scotland,
buying up its branch and consumer opera-
tions in Singapore, Hong Kong, Taiwan, Indo-
nesia, the Philippines and Vietnam, giving it
54 additional branches, US$4 billion ($5 bil-
lion) in new loans and more than US$9 billion
in new Asian deposits and a base of two mil-
lion new Asian clients. RBS had itself bought
that franchise after merging with Dutch giant
ABN Amro just two years earlier.
ANZ has since grown its total Asian cus-
tomer base to more than 2.6 million, up from
925,000 in 2007 and now has 94 branches in
Asia, compared with just 30 branches six years
ago. The Australian bank employs more than
9,100 people in the region. Earnings from its
Asia-Pacific businesses have grown more than
three-fold since 2007 to A$976 million ($1.15
billion) in 2012.
Despite the big headway the Australian fi-
nancial group has made in the region during
the gregarious CEO’s six-year tenure, two key
targets have eluded Smith: a big footprint in
South Korea and Indonesia. Smith had bid for
Korea Exchange Bank when he was heading
HSBC’s Asian operations, so when he crossed
over to ANZ, his relentless pursuit of KEB con-
tinued. A year ago, KEB was acquired by local
rival Hana Bank.
Smith also tried in vain to increase ANZ’s
presence in Indonesia by tightening the bank’s
grip on its Indonesian associate, Panin Bank.
Even though ANZ increased its stake in Panin
Bank to 39% from 30% six years ago, it was
unable to turn it into a subsidiary. With tighter
bank ownership rules in Indonesia, it is now
too late for ANZ to increase its stake in Panin,
though Smith has indicated that he is happy
with the current stake, which still puts it in
ANZ is Australia’s third largest, and among the
top 20 of the world’s best capitalised banks
BLOOMBERG

3. THEEDGE SINGAPORE | JUNE 17, 2013 • MW5
the driver’s seat at the No 6 Indonesian bank.
ANZ is now the second largest among the glo-
bal banks operating in Indonesia, behind Citi,
with 1,900 people working in its own-brand-
ed 28 branches.
Tough business
Smith’s original vision was to build a full fran-
chise in Asia — a large institutional business
and, as much as possible, a decent-sized re-
tail business. To meet that objective, the ANZ
CEO had articulated a strategy to source 25%
to 30% of his bank’s earnings from beyond
Australia and New Zealand, mostly Asia, by
2017. While barriers in the financial servic-
es business are slowly coming down across
Asia, consumer banking in the region is still
not an open playing field. Only a handful of
foreign players such as colonial era HSBC,
Standard Chartered and New York-based Citi-
bank, which have had operations in the re-
gion for more than a century, have achieved
some scale in consumer banking alongside
large local banks. “Retail banking is an ex-
tremely tough business everywhere and it is
particularly tough in Asia,” notes Sen. “Con-
sumer banking is a segment where many large
global players have faltered in recent years, so
for a bank such as ANZ expanding in a region
as diverse as Asia-Pacific, we need to remain
very focused,” he told Management@Work in
a recent interview.
But why is ANZ so keen on retail banking
in Asia, particularly in fiercely competitive
markets such as Hong Kong and Singapore?
“Retail banking brings in the brand, branches
and physical presence, which ANZ requires
for a strong super regional presence in Asia,”
says Sen. “Whatever you see here in Asia, our
branches and ATMs in Singapore, Hong Kong,
Indonesia, Taiwan, it actually helps strength-
en the ANZ brand in Asia through branding,
marketing and sponsorships,” he says. “As an
institutions-only or markets-only business, we
really would not be able to have strong brand
recognition in the region.”
Moreover, he says “retail banking also brings
sticky deposits for ANZ in Asia”. If the global
financial crisis proved one thing, it was that
retail deposits are more valued by sharehold-
ers than institutional deposits, he adds. Retail
banking also leverages the connectivity that
ANZ in Asia has with Australia and New Zea-
land as its home market, he notes. Australians
and New Zealanders working in Asia, compa-
nies from Down Under doing business in Asia
or Asian companies expanding southwards
need a bank with a strong footprint in Asia
and knowledge of Australia and New Zealand.
“We have got that connectivity well covered,”
says Sen. “Australia is the place where Asians
go, whether it is to send kids to college, buy
property or do commodities trade,” he says.
Not only is Australia nearer, or just a seven-
hour flight away, unlike the US or UK, which
are more like a 14-hour flight away, affluent
Asians are actually now more comfortable in
Australia. “As one of the largest financial insti-
tutions in Australia and New Zealand, we are
strategically the best positioned to help con-
nect high-net-worth individuals or small and
medium-sized companies in Asia to our home
market,” says Sen.
Clearly, it is not just its Asia-Australia con-
nectivity that ANZ is leveraging, but also its re-
gional connectivity. “We have affluent custom-
ers from China or the Philippines who want to
open an account or buy property in Singapore,
and customers in Indonesia or Taiwan who want
to do the same in Hong Kong,” he says. “We
have customers in China who are doing busi-
ness in Papua New Guinea and helping them
is where we can add value that some of our
competitors are unable to,” Sen says.
Aside from its core Asian markets such as
Singapore, Hong Kong, Taiwan and Indonesia,
Sen notes that ANZ has a very large business
in the Pacific region — including Fiji, Papua
New Guinea, Guam and the Solomon Islands.
“These are small but high-growth markets
where we have a large market share, so we
want to continue growing our business there,”
he says. “The Pacific is a region that is very
rich in natural resources and you don’t have
the sort of competition that you have in Sin-
gapore or Hong Kong,” he says. That means
higher margins.
China
ANZ is growing in China. It incorporated lo-
cally in 2011 and has opened new branches in
Beijing, Shanghai, Guangzhou and Chongqing.
The Australian bank also has investments in
Shanghai Rural Commercial Bank and the
Bank of Tianjin as well as a rural bank in Li-
angping and has set up an operations centre
in Chengdu. From a staff of just under 100 in
2007, ANZ now has 700 employees in main-
land China and still scaling up rapidly. ANZ
is also expanding in the Philippines where it
has a successful joint venture called Metro-
card, the second largest card firm in the Phil-
ippines. ANZ also locally incorporated its Viet-
nam operations, which paved the way to ex-
pand its branch network to nine outlets. And
it recently re-started operations in India with
the opening of a branch in Mumbai. One of
ANZ’s biggest assets in Asia does not even
carry its name. ANZ holds a 24% stake Ma-
laysia’s sixth largest bank, AmBank, up from
19% in 2007. Because of its stake in AmBank,
ANZ was unable to buy RBS’s retail operations
in Malaysia. In Taiwan, where ABN Amro had
expanded its retail network just before it was
sold to RBS, ANZ has 18 branches and 1,400
employees.
ANZ’s retail banking strategy is to grow in
key core markets: Hong Kong, Singapore, In-
donesia, Taiwan and, to an extent, China. “We
are basically playing in a niche segment,” Sen
explains. “We are investing heavily in tech-
nology and training,” he says. Because it is a
latecomer to the game in Asia and does not
have the branch network of HSBC or Stand-
ard Chartered, Sen wants ANZ to leverage dig-
ital and mobile platforms. “These days, most
people do their banking on smartphones, tab-
lets and PCs”, so it is just as well that ANZ
is not burdened by the same legacy network
and costs. “We have also done a lot of work
on things such as risk profiles, behavioural fi-
nance and we think there is a high-end niche
in retail banking in Asia where we can do fairly
well,” says ANZ’s retail bank chief. “In Singa-
pore, we have five branches, we have a strong
wealth management business, we have a good
deposit business, a strong mortgage business
and a growing cards business,” he explains.
ANZ employs 2,000 people in the city-state, up
from 150 just six years ago. And it has identi-
fied clear and differentiating niches.
“We have a growing business for non-resi-
dent Indians in Singapore,” he explains. “Our
credit card gives rewards across multiple air-
lines rather than just a single airline. We be-
lieve while there is competition with local
players as well as [the] HSBCs and Citis of the
world, there is space for niche players like our-
selves, players who have a customer-friendly
focus,” he says.
Can ANZ compete against the likes of Citi
or Standard Chartered on similar products but
without their large economies of scale? “While
scale is very important, cost management is
almost as important in retail banking,” notes
Sen. “If you can manage your cost well and
run a tight ship, you can make as much mon-
ey with five branches as the other guy can
with 15 branches,” he says. “More than just
the scale of the total business, it is also about
scale in the segment that you operate, cost in-
come ratio and managing the overall cost base.
I tell my team that we don’t want to just grow
market share in our key markets, which will
give us scale. We want to grow market share
of the revenues,” he says. “The key is not [to]
get the next 1,000 credit cards out there but
add customers who will spend more money
on the cards,” he stresses. “Since everyone in
Singapore has four or five cards in their wal-
lets, the key is to get more revenue-generating
customers.” As card acquisition costs in Sin-
gapore are high, the ANZ banker notes that
banks need to focus on acquiring high-spend-
ing customers.
“Building a credit card business in a com-
petitive market such as Singapore and create
value is not easy, but it can be done,” says
Sen. “Sure, there are demanding customers
and fierce competition but you can make mon-
ey as a niche player.”
The way Sen tells it, ANZ is not trying to
compete head-on against local players Over-
sea-Chinese Banking Corp, DBS and United
Overseas Bank in Singapore or HSBC, Stand-
ard Chartered, Bank of East Asia and Bank
of China in Hong Kong. “Our focus is on [the]
affluent and emerging affluent segment,” he
says. “We can’t get into [the] mass-market busi-
ness because we don’t have the branch net-
work,” he notes. Indeed, he says, “even if we
could build a big branch network, we won’t
because the returns just won’t justify the ex-
pense” of building it. “In Singapore, our tar-
get is mid-career affluents or emerging afflu-
ents,” he says.
How does ANZ differentiate from others
with a similar strategy? “We are trying to of-
fer family banking products,” says Sen. There
is the above-mentioned Australian connec-
tivity that gives it an edge. It is also keen to
grow its Signature Premier services — akin to
Citigold or HSBC’s Premier — targeted at cus-
tomers with US$100,000 in investable assets.
“When we expand our retail operation in any
country, we ask ourselves: What can we offer
our customers and what exactly is our value
proposition in each of the segments that we
are trying to enter?”
ANZ is currently not locally incorporated
in Singapore the way Standard Chartered or
Citibank are. Local incorporation has allowed
the two main foreign banks in Singapore to ex-
pand their branch and ATM networks. “Regu-
lators are moving towards local incorporations
and we will do what is required to grow our
franchise across the region,” says Sen. “Local
incorporation is tough for regional and global
players because they need to allocate capital
separately for each of their markets. But in the
end, if that’s what regulation requires, that’s
what we will do.” For now, he is in no rush
to incorporate locally just to get permission to
open more branches.
Simplicity, speed
Increasingly, the key to successful retail bank-
ing in Asia is “simplicity and speed” notes
ANZ’s Asian retail bank chief. “We have tried
to re-engineer our processes because we know
that banks have become too complex. Just to
get a credit card requires you to send in lots
of documents,” he notes. “There is too much
paper work involved. Some of it is necessary
but if we can somehow eliminate the unnec-
essary part, speed up the process, the custom-
er appreciates it.”
Sen says ANZ will be a formidable retail
banking player in the region in five years. “We
won’t have the same market share as HSBC
or Citi in most of the markets but we will be
very strong in our chosen niche in key mar-
kets,” he promises. “We will have a strong-
er brand and growth in core geographies as
well as stronger, embedded market share,” he
says. Fiercely competitive retail banking mar-
kets in Asia need not resemble killing fields
even though the regulatory environment is
getting tougher, regulatory costs are going up
and margins are being compressed owing to
price caps, interest rate caps and generally
higher costs. “If you get the basics right and
manage your costs well, there is money to
be made in retail banking in Asia,” he says.
“Regulators are only protecting customers, so
if you have a customer-centric approach, you
should welcome what the regulators [are do-
ing],” says Sen. The key in retail banking is
to differentiate.
After 23 years in mostly retail banking in
Asia and the Middle East, Sen has seen the seg-
ment transformed from physical branch-based
operations to transactions through ATMs, PCs,
smartphones, tablets and, soon, mobile wal-
lets. “Customer touch points are different to-
day but you still need to differentiate on prod-
ucts or services and you need to manage your
costs,” he says. Sen says he is lucky to have
been asked to build a regional retail banking
franchise just as technology is making it eas-
ier to reach a broader swathe of customers.
Just 10 years ago, it would have been difficult
to even contemplate executing such an auda-
cious growth strategy across Asia.
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BLOOMBERG
SAMUELISAACCHUA/THEEDGESINGAPORE
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