This article first appeared in The Edge Malaysia Weekly on December 19, 2022 - December 25, 2022

PUBLIC Bank Bhd founder Tan Sri Teh Hong Piow, who passed away on Dec 12 at the age of 92, was an extraordinary banker and individual. He leaves an indelible mark on the industry and in the hearts of those who worked for him.

He was a banker that other notable bankers deeply admired.

“When I first became a banker in 1989, Teh was already a banking legend. And Public Bank grew from strength to strength, making light of the most severe adverse economic conditions,” recalls Tan Sri Nazir Razak, who led CIMB Group Holdings Bhd as CEO and, later, chairman from 1999 to 2018.

“As a leader, he seemed extremely hands-on, employing almost the same degree of personal scrutiny on loans when the bank was huge as when it was small. He managed to garner strong loyalty from his staff, which gave him tremendous leverage as a leader. He is surely the most successful banker in Malaysian history,” Nazir, who is currently chairman of Bank Pembangunan Malaysia Bhd, tells The Edge.

While it isn’t unusual for employees to hold their leaders in high regard, in the case of Public Bank employees, it is clear that their reverence for Teh ran much deeper. They adored him, taking pains every year to celebrate his birthday, which falls on March 14, in elaborate fashion.

“He was a truly great boss,” one senior employee tells The Edge over the phone, through sobs. “It didn’t matter if we were Malay, Chinese, Indian … we adored him and he was generous to us.”

Indeed, he was a banker with heart, a long-time employee recalls. During the 1997/98 Asian financial crisis, banks took a hit. But Teh lowered the housing loan interest rate for staff and, in some cases, waived the interest for loans below a certain amount, she says.

He was generous with yearly bonuses, and in the years that the bank performed particularly well, he would also give one-off bonuses to all staff, she adds.

Though generous, Teh kept a tight rein on costs. In fact, his hallmark prudent and conservative management of Public Bank is widely lauded and often talked about in the industry. One former manager recalls that Teh required every bit of spending to be closely accounted for, right down to the toilet rolls.

It is no surprise that Public Bank is widely considered by analysts to be one of the best run banks in Malaysia, and the stock is often sought by investors for its good dividends. The bank consistently outperforms its peers on a number of key metrics such as return on equity, asset quality and cost-to-income ratio.

The last time Public Bank staff got to see Teh at a company event was in August, at the bank’s 56th anniversary banquet at a hotel in Petaling Jaya. This was just before his wife, Puan Sri Tay Sock Noy, whom he had been married to since 1956, passed away on Aug 12.

“He had aged — he is 92, after all — but still seemed as sharp and alert as before,” says a senior employee who attended the company event.

One of the country’s wealthiest men, Teh founded Public Bank in 1965 at the age of 35. As the CEO and managing director, he dedicated his life to building the bank. Today, it is the country’s third largest banking group by assets after Malayan Banking Bhd (Maybank) and CIMB Group.

In July 2002, Teh stepped down as CEO and became the bank’s non-executive chairman — a post he held until his retirement on Dec 31, 2018. Upon retirement, he was conferred the position of chairman emeritus and adviser of the bank. At the time, it was understood to be the first time anyone in the industry had held the title of “chairman emeritus”.

Born in 1930 in Singapore, Teh had his primary and secondary education at the Anglo-Chinese School there. He started out as a bank clerk at Oversea-Chinese Banking Corp Ltd in 1950 and within five years, rose through the ranks to become an officer. He joined Maybank as a manager in 1960 and four years later, was promoted to general manager at the age of just 34. Not long after, he left the bank to set up Public Bank.

“Teh was instrumental in the shaping, development and growth of the Malaysian banking sector through his wealth of experience and insights garnered over his career as a seasoned banker since 1950,” Maybank president and CEO Datuk Khairussaleh tells The Edge.

“Having served at multiple banks, including Maybank, Teh will be remembered for his illustrious career …  and the tremendous value he created for [Public Bank] and its people,” says Khairussaleh, who is also chairman of the Association of Banks in Malaysia.

Though the mood is sombre following Teh’s demise, it is nevertheless expected to be business as usual at Public Bank.

“As much as his presence will be missed, it should be business as usual at the banking group for he left the bank in capable hands,” says Desmond Ch’ng, a banking analyst at Maybank Investment Bank Research, in a Dec 13 report.

However, all eyes will be on what becomes of Teh’s substantial shareholding in the bank, as it could result in the emergence of new shareholders. He has four children, none of whom is said to be interested in taking over the business. None works at the bank.

Teh had a total shareholding of 23.4% in Public Bank through his private investment vehicle Consolidated Teh Holdings Sdn Bhd (21.64%), LPI Capital Bhd (1.1%) and a direct stake of 0.64%. Bloomberg listed his holdings in the bank as his biggest assets.

At the closing price of RM4.38 last Friday, his holdings would be worth about RM19.9 billion.

Maybank’s Ch’ng points out that the bank’s valuation is high, which would make it expensive for any suitor eyeing Teh’s stake. For now, he expects the shares to go into a family trust.

“Public Bank trades at a sector-leading historical price-to-book value of 1.7 times, though this is justified in terms of its return on equity (FY2022 forecast: 12%), which is also the highest in the industry. Any M&A being considered could prove to be a costly exercise for any domestic acquiror, in our view. We would expect the shareholding to go into a family trust, at this stage,” he says.

CGS-CIMB Research’s Winson Ng says in a Dec 12 report, “The possibility of M&A for Public Bank in the future depends on the plans of the person(s) who will inherit these stakes, in our view.” Public Bank’s share price fell 0.9% week on week to close at RM4.38 last Friday, giving the company a market capitalisation of RM85.02 billion.

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