Tam's Plans For DaoHengBank Lie In Regional Opportunities

Majority Malaysian-owned DaoHengBank's new general manager of treasury, P.S. Tam, says he sees the opening up of China as the bank's best opportunity for the Hong Kong-based bank's growth.

"Since DaoHeng is not a major international bank, we have to focus on the business where we have strength in the future," says Tam, who joined the bank in February from Standard Chartered in Hong Kong.

DaoHeng has a front-office team of about 45 traders and sales staff in Hong Kong, with 11 dealers in FX, he says. Spot FX is divided into two units: margin customers and commercial requirements, says Tam.

The local Hong Kong dollar business comprises the bulk of trading business, however, the bank is also active in some regional Asian exotics, as well as some of the major currencies. The bank has three dedicated FX corporate dealers who focus primarily on local clients.

Tam, aged 38, has spent his entire career in Hong Kong. He started at Bank of Tokyo in 1979 and later joined JP Morgan in 1985. In 1992 he went to Standard Chartered, where he was the trading manager, overseeing about 50 dealers until earlier this year. He is also the current president of the Hong Kong Forex Association.

DaoHengBank's holding company, Guoco Group, is one of the largest Malaysian conglomerates, says Tam. DaoHeng will legally merge with Overseas Trust Bank (OTB) in October after the official two-year waiting period since the 1993 purchase has elapsed.

Once the two combine, Tam says, the bank will become one of the top five local banks in Hong Kong.

According to Tam, the bank has been building up both domestically and, to a lesser degree, at its overseas operations in London and China. "Now we are trying to strengthen and focus on the best way to grow the business," he says.

Tam says the bank's natural strengths are in the Hong Kong dollar and the renminbi. He adds that the Asian regional currencies are also likely to be an area of strength for DaoHeng.

"We have the edge there," he says. "We have to be selective; we can't make markets in everything. We want to take a leading role in the currencies we're comfortable in."

When the renminbi does become convertible, which he says could be in 1998 or the year 2000, the challenges will be huge.

"The renminbi could be among the top-ten reserve currencies -- and that's coming from nothing to top ten," he says, predicting that "a lot of business should go through this country."

Tam says he believes the Chinese government would like Hong Kong to remain an international financial centre, while Shanghai will likely cater to local domestic markets. "Therefore, Hong Kong will remain very active with the renminbi," he adds.