Billionaire Wee to Retire as Chairman of Family Bank

UOB Posts S$713 Million Profit, Beating Analyst Estimates
Pedestrians walk past a United Overseas Bank Ltd. branch in Singapore. Photographer: Munshi Ahmed/Bloomberg

Wee Cho Yaw, the 83-year-old billionaire who turned a local Singapore bank into Southeast Asia’s third-biggest lender, plans to step down as chairman of the family-controlled United Overseas Bank Ltd.

Wee, whose son Wee Ee Cheong took over as chief executive officer in 2007, will give up his role to Hsieh Fu Hua, a former president at Temasek Holdings Pte in April, according to an exchange filing yesterday. The lender also reported a 12 percent increase in second-quarter profit, surpassing analysts’ estimates, following gains on investments.

“This is a passing of the baton, quite wisely you can’t hold on forever,” said Hugh Young, Singapore-based managing director at Aberdeen Asset Management Asia Ltd., which owns slightly less than 5 percent of UOB. “Hsieh has a wealth of experience, knowledge of the financial industry, is well plugged in and respected. It’s a sensible transitional change.”

The elder Wee, whose father founded the bank in 1935, has charted acquisitions in Indonesia and Thailand that boosted earnings and expanded operations beyond Singapore’s 5.2 million people. He had led UOB as its CEO for more than three decades, beating bigger rival DBS Group Holdings Ltd. in an acquisition to extend his reach in Singapore, and propelled the bank into new markets such as Greater China, which made up 6.5 percent of pretax profit in the first half.

Profit Gain

UOB’s net income gained to S$713 million ($574 million) in the three months ended June 30, from S$636 million a year earlier, the bank said yesterday. That beat the S$627 million average of nine analysts’ estimates compiled by Bloomberg. Fees and commissions rose 14 percent while investment income and gains from the sale of securities jumped 30 percent, compared with 7.4 percent growth in income from lending.

UOB joins DBS and Oversea-Chinese Banking Corp. in reporting higher earnings as high-quality borrowers buffered an economic slowdown, narrowing loan profitability and effects from Europe’s debt crisis. The Monetary Authority of Singapore’s forecast for 1 percent to 3 percent growth this year will make further earnings improvement difficult, Barclays Plc said.

“In a slowing environment, it’s hard to see strong revenue growth for the rest of the year for Singapore banks,” Lyris Koh, a Singapore-based analyst at Barclays, said before the results. “I would still be cautious on the outlook for asset quality just because as growth slows, we think that non-performing loans might naturally start seeing an uptick,” she said.

Shares Advance

The stock rose 0.8 percent to S$20.10 as of 10:40 a.m. in Singapore trading, extending the gain this year to 32 percent. That’s the best performance among the three Singapore banks, with DBS advancing 28 percent and OCBC adding 20 percent.

In 2001, the elder Wee also defeated DBS, the region’s biggest bank by assets, in the S$10 billion takeover of Overseas Union Bank Ltd. as the controlling family blocked a hostile bid by DBS and opted for the sale to Wee.

The tussle for Overseas Union also led to statements by DBS and its adviser Goldman Sachs Group Inc. distributed to investors in Europe questioning the integrity of directors at Overseas Union and UOB. The Singapore regulator said DBS and Goldman acted “inappropriately” during the failed bid, which resulted in a public apology.

The younger Wee, 59, joined the bank in 1979 and was named deputy chairman and president in 2000.

Strategy Intact

The billionaire chairman owns shares in property investor UOL Group Ltd., Tiger Balm maker Haw Par Corp., developer United Industrial Corp. Ltd., United Overseas Insurance Ltd. and United International Securities Ltd. He holds 263.8 million shares in UOB worth $4.2 billion, according to data compiled by Bloomberg. The Wee family owns between 17 percent and 18 percent of the bank, UOB said in a statement today.

“For the last over 50 years, his reputation and contribution to the industry goes without saying,” CEO Wee said of his father at a briefing in Singapore yesterday. “At some point, we need to have transitions. As far as management is concerned, as far as strategy is concerned, it all remains intact.”

Hsieh stepped down as a president at Temasek, Singapore’s state-owned investment company, in October 2011 after 13 months to “make room for personal priorities.” He was also a former CEO of Singapore Exchange Ltd.

The bank’s net interest income for the quarter was S$981 million, compared with fee and commission income of S$386 million and other non-interest income of S$243 million.

Wee’s Compensation

During the tenure of the elder Wee, who was born in Quemoy, China, UOB became the first Singapore lender to get a license to conduct operations in yuan in 2002.

The chairman was paid S$2.75 million to S$3 million in the year ended Dec. 31, according to UOB’s annual report. His compensation included a S$2.25 million fee for “providing valuable advice and guidance” to the management, it said.

“This could cede more power to the CEO and the executive management, given that the old man has been a very strong hand,” Aberdeen’s Young said. “Maybe the son will feel a little freer, which would be understandable. Working with a chairman who has lived and breathed the bank can be a little intimidating, especially or even if he’s your father.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE