Published September 1, 2009

CIMB a contender in retail banking ring

Bank hopes to reel in customers with mobile squad, high interest rates

By JOYCE HOOI

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(SINGAPORE) In Singapore, where CIMB Bank Singapore stands a David amongst the local Goliaths of retail banking, the Malaysian banking group is carefully loading its slingshot and taking aim.

Mr Mak: 'If you don't have an ability to collect deposits, your ability to lend is also curtailed.'

For the past year, the group has been quietly operating a retail banking outfit under the CIMB Bank Singapore brand. Now, the group has deemed it the right time to formally sound the battle-cry, with an official launch in late September.

'Late last year, we decided that we wanted to increase our presence in Singapore,' said Mak Lye Mun, CIMB Bank's chief executive officer.

From an almost non-existent deposit base in mid-2008, the bank now has $400 million in retail deposits, reeling in depositors with its 1.2 per cent interest rate per annum and low minimum fixed deposit amount.

'People are asking if we are overpaying at 1.2 per cent when other banks are giving 0.2 per cent. The important thing to ask is, are other banks underpaying instead?' said Mr Mak.

With the restrictions on foreign banks applying to CIMB Bank, which is not part of the Qualifying Full Bank scheme, the odds are stacked against this pint-sized contender. There is a two-branch cap on banks like CIMB. Currently, it has one at the Singapore Land Tower and another at Wilkie Edge.

Nevertheless, an unperturbed Mr Mak has found a way to reach local depositors with a 'mobile squad' of bankers.

Started in June, a team of 60 CIMB bankers has been deployed to visit retail banking customers to help them with a myriad of banking activities, from opening a new account to collecting a cheque for deposit.

'Most people would rather not go to a bank branch. And branches cost money, while mobile bankers don't take up as much space. We can be both efficient and save money,' said Mr Mak.

The mobile squad is expected to grow to 80 personnel by the end of this year. Since end-2008, CIMB Bank's headcount has also grown, from 100 to 313 employees, as it geared up to be a challenger in the retail banking scene.

'Retail banking is key. If you don't have an ability to collect deposits, your ability to lend is also curtailed,' said Mr Mak. Along with larger lending power will come a bigger share of the rights offering pie, something that CIMB Bank is clearly eyeing.

While CIMB Bank might be the underdog in Singapore, it is the second biggest consumer bank in Malaysia, and its claim to regional domination is clear.

Since 2007, it has been making acquisitions at a prodigious rate, buying Bank Thai in Thailand and Bank Niaga in Indonesia, and stamping the CIMB brand on their outlets.

The move to gain a retail toehold in Singapore is as much motivated by the local market as well as by the desire to keep its Indonesian and Thai customers loyal, even when on holiday in Singapore.

Mr Mak also pointed out that the strategy works the other way around.

'Our value proposition to local customers is that we are offering a South-east Asian service. So, when Singaporeans travel, their credit cards and benefits can be used in Thailand, Malaysia and Indonesia as well,' said Mr Mak.