By Goh Eng Yeow, Markets Correspondent

THE two Chinese characters Cai Jin marry wealth with good fortune - signalling the necessary presence of these two factors for any investor to prosper.

It is in this spirit that we will be carrying a Cai Jin column every Monday on salient financial matters and good corporate governance issues that can affect investors.

There is no better way to kick off the series than by praising Mr Richard Stanley for having the guts to admit that his bank DBS has disappointed Singaporeans over its management of POSB over the years.

He freely conceded that the bank had under-invested in the POSB network, despite it happening on someone else's watch.

To many investors, the DBS chief executive's admission marked a refreshing change from the traditional stiff upper-lipped boss whose default setting is to maintain a stony silence over any mistakes - past or present.

DBS investors will benefit if he succeeds in using the POSB franchise as a launch pad to expand the bank's footprint, as the global credit crunch crisis bites deeply into other banks' balance sheets and curtails their efforts to expand.

Mr Stanley will also have pleased small savers and investors with his promise to re-energise POSB and turn it around.

His approach is markedly different from that of predecessor Jackson Tai, who was once told by OCBC Bank chairman Cheong Choong Kong "to get off his high horse" and appreciate that the POSB network was a very valuable prize which other banks wish they had a chance to acquire.

DBS is not simply any bank. It is the people's bank and assumed a special standing after it took over the much-loved POSB in 1998, which at the time counted almost every adult Singaporean as a customer.

It rankled small POSB savers to find themselves derided over the years as a burden to DBS - an "unwritten social contract" that one would be hard-pressed to find another commercial bank elsewhere undertaking - as former DBS consumer banking chief Edmund Koh once put it.

And it would seem that whatever DBS did, it was sure to irk some small savers.

The latest incident occurred in May when DBS attracted a lot of flak by shutting out retail investors when it raised $1.5 billion in a preference share issue.

Even though the preference shares might be a relatively more risky form of investment, many were tempted by the attractive 5.75 per cent dividend payout, well above the 0.25 per cent return on a POSB savings account.

One reader complained that DBS's action was simply a reflection of its disinterest in small fry like him: "So easy to give the shares to the big boys. Less of a hassle."

But good bankers know that small savers do count in a big way.

When financial markets become turbulent and earnings from investment banks and other big-time players dry up, the little guys are one of the few reliable sources of income.

Some will argue that it was HSBC's good fortune to have a bedrock of support among Hong Kong savers in order to build a global banking empire.

Others recall that it was Citigroup's powerful Asian consumer banking franchise that helped to save the day for the US banking giant when it was last hit by a real estate crisis in the United States nearly 20 years ago. The huge profits it makes from Asia may well save it again in the current crisis.

So it is good to note that Mr Stanley - an ex-Citibanker - is making the effort in DBS to engage more in Singapore and to leverage on the privileged position it enjoys through POSB.

Despite being under-invested over the years, the POSB name continues to tug at Singaporean hearts. Wander into any POSB branch on a Saturday and you will find it crammed with customers.

Some will shrug off Mr Stanley's efforts as another half-hearted bid to "relaunch" POSB. In the past, these had included attempts to set up "minibank" outlets at NTUC FairPrice supermarkets, a move later shelved.

It will be good for Mr Stanley to keep up the momentum with a slew of initiatives and make sure that what he has said is not just some empty promises.

As Singapore's hopes run high for a medal in the Beijing Olympics, it is possible that in the highly competitive financial arena, DBS can sprint from being a national champion to a banking giant with the right moves.

This article was first published in The Straits Times on Aug 11, 2008.

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