Even the largest of companies often started small; interview with Public Bank Bhd’s founder and chairman Tan Sri Teh Hong Piow on his journey from opening his first branch in Malaysia to being a regional banking powerhouse

Updated: Saturday January 18, 2014 MYT 9:01:05 AM

Even the largest of companies often started small



Teh: No one has a crystal ball that can tell you whether you will succeed or not

GREAT companies always draw the interest of potential investors, suppliers, shareholders and yes, their customers! It should be noted that great businesses were small and medium-sized enterprises (SME) or startups once upon a time. It is the persistence, innovation and entrepreneurship that drives a company towards success through various business cycles.To start off this monthly column, Metrobiz speaks to Public Bank Bhd’s founder and chairman Tan Sri Teh Hong Piow on his journey from opening his first branch in Malaysia to being a regional banking powerhouse.

Banking with Public Bank Bhd is likely to leave many customers with the word efficiency stuck in their minds.

The officers in charge of the counter have been known to remind the tellers, or what some banks now call customer service assistants, of the number of customers waiting.

It is not surprising as the head office takes customer satisfaction seriously. Branch managers are asked from time to time to report the waiting time of their customers, apart from sales figures.

Teh says that starting the bank, which has an unbroken track record of 47 years of profitability, for the public was an endeavour that provided many opportunities.

“I knew that organic growth was important and the fastest way to grow organically was to be on a continual lookout for uncharted pathways.”

Teh says in the early days of the bank, the financial landscape was dominated by foreign banks that catered almost exclusively to the wealthy while overlooking the needs of the common people.

This spurred him to come up with the idea of providing banking services for the “unbanked” masses — the public from all walks of life.

Considering himself a Malaysian first and foremost, Teh says the founding of Public Bank is his sincere commitment and support of Malaysia’s national interest. “I believed and still believe that Public Bank has a big role to play in contributing towards nation-building. Adopting a domestic agenda meant we were able to help bolster the growing economy.”

Teh first joined the banking industry as a clerk in OCBC Bank back in the 1950s.

After 16 years in the banking industry, with six defining years in Malayan Banking, he resolved to do nothing else but banking. “Nothing less than owning my own bank,” he declared resolutely.

Seizing the day

Recalling that government policy then was gearing towards progress and development, Teh says there were many avenues for growth if one was prepared to work hard and seize opportunities.

As he had managed to acquire the necessary skills, experience and connections to make a successful venture, he knew then that the time was right to realise his dream.”

The then finance minister Tun Tan Siew Sin approved the banking licence to set up Public Bank and the rest is history.

Public Bank, known as a “bank for the people” was established and commenced operations in Kuala Lumpur on Aug 6, 1966 with 32 employees.

But just like any other new business, they faced challenges in raising funds as they had to challenge the dominance of foreign banks and win over the confidence of consumers and investors.

Teh, while working with a bank in his early days, had taken a chance and invested in real estate. This earned him the necessary seed capital to set up Public Bank.

By the end of 1966, Public Bank’s paid-up capital stood at RM12.75mil and the following year, it was listed on the Kuala Lumpur Stock Exchange with paid-up capital to RM16mil, a record for a commercial bank during that time.

The bank literally started off as a public listed company as it was listed less than a year after it was incorporated.

“We were on a quest to grow and we wanted to get ourselves on the right track immediately. Irrespective of whether a company is listed or not, the culture of corporate governance and transparency has to be in place. (Starting) a public listed company right from the onset (also) enhanced the trust and confidence of the customers,” he adds.

Teh also had to manage negative feedback on his risky venture. Learning that not all negative people are naysayers, he says that while negativity and questions can be hurtful, they can also come with good intentions.

“No one has a crystal ball that can tell you whether you will succeed or not. But you can control how you handle those around you and their impact on your goals,” he says.

By being optimistic, Teh says one may even be a source of inspiration as people sincerely want to see you succeed.

Regional powerhouse

Within five weeks of opening in Kuala Lumpur in 1966, the bank opened a branch in Malacca. This was followed by another branch in Ipoh the next year.

Thereafter, the bank continued to expand its branch network, covering Penang, Johor Baru and the rest of peninsular Malaysia. By the mid-1980s its reach had spread to Sabah and Sarawak.

In the 1990s, Public Bank started looking beyond Malaysia’s borders. It acquired what was then Hong Kong’s largest deposit-taking company, JCG Finance Company Ltd, which was later renamed Public Finance Ltd. Within a year, it provided a 30% return on investment, with a pre-tax profit of RM18.2mil.

Subsequently, the bank expanded to Vietnam, Cambodia, Laos and Sri Lanka.

Seeing it as a way to expand the bank’s future, Teh says the growth abroad continues to create a mixture of emotions — apprehension, excitement and confidence.

“(While) I knew that I was venturing into something that I felt the bank was capable of, at the same time I was (also) going to stretch its capabilities,” he says.

And his winning formula?

Teh says in the banking business, integrity, prudence, compliance and control are of utmost importance. It also has to be sustainable.

“Right from the beginning, our people are inculcated with the necessary values and the proper way of doing things. In banking, being sassy is not a priority. We need to get the basics right as we are dealing with the most precious of all commodities — money — which is often someone’s life savings or hard earned rewards,” he says.

Being sustainable also takes the form of talent management and succession planning. For this, Teh is looking to Tan Sri Tay Ah Lek, the current managing director and chief executive officer and his deputy, Quah Poh Keat.

“The bank has established a structured succession planning process for senior management staff in all key business areas,” he says.

As part of the bank’s investment in human capital, Teh says suitable potential candidates are nurtured with relevant training, skill development programmes and job-related exposure to prepare the candidates for higher levels of responsibility.

“Over the years, key senior management personnel retired and the vacancies were filled by internal promotion of the earmarked candidates, resulting in a smooth and uninterrupted transition,” he says.

All for one

Teh, who will be 84 this year, remains focused and determined in driving the bank’s mission, which is “to sustain the position of being the most efficient, profitable and respected premier financial institution in Malaysia” after all these years.

“I always keep myself motivated and I do not dwell on setbacks as I believe that perseverance pays off,” he says.

Although he admits he knows the banking business more than any other, Teh emphasises that for any company to grow, it cannot be a one-man effort.

Adding that he was lucky to have an enthusiastic board and staff who are committed to raising stakeholder value, he says having a strong support team working together towards the same vision is very reassuring.

“It helped me to overcome each obstacle that cropped up in the course of establishing and building Public Bank to what it is today,” he says.

An ultimate measure of a company’s success is the extent to which it enriches share- holders, and Teh says maximising shareholder value has remained a high priority to the bank.

“(Our) ability to preserve and build the long-term intrinsic value of shareholders’ investments is clearly proven through (our) consistent and strong performance,” he says.

Two years after its listing on the Kuala Lumpur Stock Exchange, Public Bank posted an annual pre-tax profit of more than RM1mil in 1969. From then, it has maintained an unbroken track record of profitability, surpassing the RM5bil mark in pre-tax profit for the first time in 2012. Net profit for the year stood at RM3.9bil.

Moving forward, Teh shares in today’s competitive environment, success has to be a balance between being adventurous and cautiously optimistic.

“As competition takes a different face, it will be an exciting era,” he says.

Adding that staying relevant while retaining the discipline and hunger to succeed is vital, he concludes: “This is the challenge for the Gen-Y and millennial generations.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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