Wither MPF in DBS' acquisition of Dao Heng?

When DBS decided to acquire Hong KongÆs Dao Heng Bank, it is certain that Dao HengÆs Mandatory Provident Fund scheme business was not the prize. The bank is a middling player in the crowded and costly MPF market, and is better known for strengths in customer relations management and other skills. Besides, DBS Asset Management has its own minor MPF business in the form of the joint venture with Kwong On Bank.

Nonetheless, the merger creates a sticky situation for the firm's asset management ambitions. DBS Asset Management is aggressively trying to build its franchise, as its Kwong On JV attests. But so is Dao Heng, which has a joint venture with Friends, Ivory & Sime of Edinburgh, Scotland, which has given a local bank a sophisticated, international asset management offering. George Chan, director of Dao Heng Asset Management, said last year that MPF was seen as the anchor behind launching Dao HengÆs fund management business.