DBS CEO Piyush Gupta is unsackable

[LITTLEREDDOT]

The fallout​

DBS, oil and gas stocks among biggest casualties​

The DBS logo on DBS Asia Hub at 2 Changi Business Park Crescent. PHOTO: ST FILE

Grace Leong
Senior Business Correspondent


JUL 29, 2016

Fear of contagion from the shock bid for the winding up and provisional liquidation of offshore services firm Swiber Holdings battered the stock market yesterday.
Banks and the oil and gas sector were among the biggest casualties.
Shares of DBS Group Holdings, Swiber's major banker, were hit hard as it had been backing a debt restructuring bid to help the firm weather a protracted offshore and marine sector downturn.
DBS shed 2.3 per cent, or 38 cents, to $15.88 as the Straits Times Index fell 0.78 per cent on the day.
Swiber's woes sent shockwaves through the oil and gas sector, as investors dumped what they perceived to be vulnerable counters.
Vessel charterer Vallianz Holdings fell nearly 42 per cent to a new low of 1.5 cents, following the move by controlling shareholder Swiber, which holds a 25.2 per cent stake. Some 307.6 million shares changed hands, making it the most hotly traded stock and sparking a Singapore Exchange query.
Responding, Vallianz cited the resignation of non-executive director and chairman Raymond Kim Goh, 48, - also Swiber's executive chairman - owing to "health reasons" and Swiber's move. But it said business is continuing as usual.

It will be "a long, harsh winter" for the oil and gas industry, already hit by a protracted price slump due to oversupply, an analyst said. "The market is selling ahead of possible fallout for all highly geared oil and gas companies."
DBS, which played a part in the refinancing of debts on Swiber's balance sheet, said it has total exposure of about $700 million to the Swiber group of companies.
"As the exposure is partially secured, DBS expects to recover half of it and will provide fully for the anticipated shortfall. DBS will tap on its surplus general allowances, and the net allowance charge will be lower at about $150 million," DBS said in response to media queries.
The balance sheet remains strong, with minimal impact on its capital adequacy ratio, DBS said.
OCBC Bank noted that it was not listed as a principal banker to Swiber in the firm's annual report. United Overseas Bank said its exposure was "manageable".
At least two oil and gas firms, whose stocks were ravaged yesterday, have sought to distance themselves from the contagion.
Swissco Holdings, whose stock tanked nearly 18 per cent to six cents, said its results will not be affected as it has no business dealings with Swiber. Ezion Holdings, which lost 8.7 per cent to 31.5 cents, made similar statements. Both noted that their business was in a different sector from Swiber's.

 

[LITTLEREDDOT]

Singapore bank concerns grow on oil and gas sector amid Swiber's collapse​

OCBC, UOB and DBS, have long maintained prudent lending standards and capital levels that make them among the safest banks in the world. PHOTO: BLOOMBERG

JUL 29, 2016

SINGAPORE (REUTERS) - DBS Group Holdings, Singapore's biggest lender, said it expects to recover about half of its S$700 million exposure to the collapse of a big Singapore oilfield services firm, as the two other top banks flagged mounting concerns about loans to the oil and gas sector.
Oversea-Chinese Banking Corp and United Overseas Bank, Singapore's second- and third-largest lenders by assets, along with DBS, have long maintained prudent lending standards and capital levels that make them among the safest banks in the world.
But the 60 per cent slump in oil prices over the past two years is beginning to impact them, as the lenders' main activity is centred on South-east Asia, where oil and gas is a key industry.
Banks are being hit by both poor demand for loans from the sector and by more loans turning sour, and both OCBC and UOB issued a dour outlook for oil and gas when they reported earnings on Thursday (July 28).
Swiber Holdings became the biggest Singapore business so far to fall victim to oil's slump, after it said on Thursday it had filed for liquidation.
In a statement after the filing, DBS said it has exposure to Swiber through loans, bonds and off-balance sheet items.
DBS said it planned to tap into reserves to offset the half of its exposure that it does not expect to recover, and anticipates booking a shortfall charge of about S$150 million.

Analysts said DBS' exposure has raised risks about sharper-than-expected asset quality deterioration for banks.
Goldman Sachs said in a note the additional S$150 million of provisions to be taken in the second quarter ending June will impact its 2016 earnings by a negative 3 per cent due to higher credit cost. The investment bank cut its price target on DBS to S$17.60 from S$17.70.
Shares in DBS, which will report results for the quarter ended June on Aug 8, fell for a second straight day on Friday and at 10.38am were down 2.5 per cent at S$15.47.

Speaking during a briefing after reporting quarterly earnings, OCBC chief executive officer Samuel Tsien warned the oil and gas services sector continues to be under pressure.
"The loan demand is very weak," he said, after OCBC posted a 15 per cent drop in quarterly profit, hit by lower insurance income. "Our distressed indicators for this portfolio continue to deepen, but have not broadened."
Over the next year-and-a-half, bonds totalling nearly S$1.2 billion from energy and offshore marine issuers in Singapore will mature, with S$615 million due just over the next five months, according to IFR, a Thomson Reuters publication.
OCBC's total oil and gas exposure was S$12.6 billion, nearly half of which to the offshore oil services segment.
Meanwhile UOB expects that over the next one to two years the key concern for the bank will be companies in the oil and gas sector, its CEO Wee Ee Cheong told a briefing. UOB surprised analysts with a 5.1 per cent jump in earnings on higher trading income.
While their earnings trends differed, net interest income was weak at both banks, which also saw bad-debt provisions climb.
OCBC said its customer loans contracted 2 per cent from a year ago due to lower trade loans and reduced offshore borrowings of Chinese companies due to more favourable onshore borrowing rates in China.
Shares of UOB were down 1.6 per cent in Friday morning trade, while OCBC fell 1.7 per cent.

 

[LITTLEREDDOT]

DBS's ability to manage bad loans questioned in JP Morgan report​

JP Morgan analysts cut their rating on DBS to neutral and recommended investors sell the bank's stock ahead of its second-quarter earnings announcement on Aug 8. PHOTO: ST FILE

AUG 4, 2016

SINGAPORE (BLOOMBERG) - DBS Group Holdings' ability to handle nonperforming loans was questioned by analysts at JPMorgan Chase after the Singaporean bank revealed potential losses from its S$700-million exposure to a troubled oil- services firm.
In an Aug. 3 report, JPMorgan analysts Harsh Modi and Raunak Mukherjee cut their rating on DBS to neutral from overweight and recommended investors sell the bank's stock ahead of its second-quarter earnings announcement on Aug. 8.
Singapore's largest lender said in a July 28 filing that it expects to recover only half of its exposure to Swiber Holdings Ltd. and its units, for which it would set aside provisions of S$150 million.
"The core tenet of DBS's investment thesis is the bank's ability to tide over ongoing NPL cycle better than peers due to shifts in underwriting practices since 2009," Mr Modi and Mr Mukherjee said. "The abrupt downgrade of S$700 million exposure to Swiber challenges that confidence."
Swiber, which provides construction services for international oil and gas projects, filed a petition last week to liquidate its operations, after facing payment demands from creditors. The firm subsequently dropped the liquidation in favor of a plan to operate under judicial management, which would allow it to continue business under court supervision while it attempts to turn itself around.
The JPMorgan analysts cut their forecasts for DBS's earnings for this year through 2018 by 6 per cent. They lowered their share-price target to S$15 from S$16. The stock last traded 0.3 per cent lower at S$15.05 as of 4 p.m. on Thursday.
"There is a risk that investors' perception on DBS's asset quality pivots back to the bank's track records during the 2008-2009 cycle, limiting the upside of the stock," the analysts wrote.

 

[LITTLEREDDOT]

Timeline: How London talks, US$146m from DBS could not keep Swiber afloat​

A Swiber logo is pictured at their office in Singapore on July 10, 2013. PHOTO: REUTERS

AUG 4, 2016

SINGAPORE (BLOOMBERG) - A proposed investment that never happened, talks in London and Singapore, and a last-minute overdraft facility from DBS Group Holdings all failed to prevent Swiber Holdings from filing for liquidation, according to court documents seen by Bloomberg News.
The saga, which began when executives of the Singapore-based company pushed to complete a US$200 million deal with London-based private-equity firm AMTC Ltd, gave the outside world little hint about what was brewing, the documents show. Swiber even repaid two bonds totaling S$205 million during that period.
On Aug 2, it retracted its surprise winding up plan and instead sought court approval to appoint judicial managers to help reorganize its business.
Swiber's journey from a supplier to the offshore oil and gas industry to distress highlights the uncertain fate of investors in S$460 million of bonds and 450 million yuan ($68 million) of notes that the company has yet to honor. The Swiber incident is also putting on notice companies in the same industry, said Bernard Aw, market strategist at IG Asia Pte. Oil-related firms face S$1.4 billion of local-currency securities maturing through 2018, with S$325 million due by year-end, according to Bloomberg-compiled data.
Swiber's troubles deepened as negotiations with AMTC dragged on. Swiber broached the idea of a bridge loan with the London firm. AMTC offered a six-month bridge loan of £100 million pounds at an interest rate of 6 per cent, the investment firm's Chief executive officer Smith O'Connor said by phone on Aug 2. Swiber rejected the alternative offer as too expensive, he said. AMTC turned cold about investing in Swiber on advice from its consultants, he said.
Swiber chairman Raymond Kim Goh didn't return calls to his office. DBS said on Tuesday it provided a bridge loan to Swiber on "the expected equity injection" from a new investor that it didn't identify.
Swiber officials kept pursuing a deal with AMTC even after deadlines agreed with the firm came and went. It turned to DBS, the company's biggest lender, for more cash as two bonds came due, according to the documents, filed with the Singapore High Court. Loans from DBS to repay bondholders helped prolong the survival.

The company even assigned its receivables, vessel mortgages and a stake in Sigapore-listed Vallianz Holdings, as well as the potential cash infusion from AMTC, as collateral. Senior management at Swiber also pledged their shares in the company as security for one of the loans, according to the documents.
Tired of waiting for the AMTC cash that never came, Swiber's board met on July 20 and gave itself an ultimatum: If the private-equity firm's investment wasn't in by July 26, the company would file for liquidation, according to the court documents.
As demands from creditors and trade suppliers piled up - and with less than US$8 million of cash in hand and no working capital - Swiber filed for voluntary liquidation on the evening of July 27. On Aug 2, it withdrew its liquidation plan and won interim court approval for a supervised rescue.

The following is a chronology of events according to court papers and exchange filings, beginning in late May when officials from Swiber were pushing for a deal with AMTC.
May 25: Key Swiber executives meet with AMTC to finalize an investment deal first initiated in February. They propose that AMTC doubles its planned investment to US$200 million by subscribing to redeemable perpetual preference shares in a unit.
May 27: AMTC enters into a memorandum of understanding to invest in Swiber and confirms it has funds for the proposed deal, with the first tranche due on May 31, and the second 30 days later.
May 30: Swiber executives meet with DBS to seek a bridge loan to redeem a bond due on June 6 while waiting for the AMTC investment to come through on May 31. A day later, DBS agrees to review the loan request.
June 2: AMTC writes to Swiber to ask for more time to pay the first US$100 million. On the same day, DBS offers Swiber an US$85 million one-month loan to redeem S$130 million of bonds.
June 9: Swiber's unit signs a subscription agreement with AMTC, with completion due on June 16. At the same time, AMTC asks for longer to undertake due diligence, to which Swiber agrees.
June 22: Swiber engages Cameron Duncan from restructuring firm KordaMentha Pte to assess its financial status and cash- flow position amid concern that the AMTC cash infusion will be delayed because of the extended due diligence.
June 25: AMTC completes its due diligence and undertakes to remit US$200 million by June 28.
June 27: AMTC requests more time to complete the remittance; Swiber declines to extend the deadline.
June 28: Sensing that the AMTC investment is not forthcoming, Swiber executives meet with DBS to seek another loan to repay S$75 million of bonds maturing on July 6.
July 2: Swiber sends letter of demand to AMTC.
July 4: Swiber chairman Goh meets with DBS senior management to inform the bank of its inability to redeem the S$75 million of bonds.
July 5: Goh and other executives meet with DBS officials and are offered a US$61 million overdraft facility; the bank lays out conditions including requiring Swiber to appoint a special accountant from KPMG.
July 14: Swiber executives meet AMTC in London again, this time to discuss a £100 million bridge loan while waiting for its subscription to preference shares, without success.
July 20: Swiber holds a board meeting and decides on liquidation if the AMTC money doesn't arrive by July 26.
July 26: Letters of demand from various creditors, trade suppliers and sub-contractors amount to US$25.9 million.
July 28: 1:04 am, Swiber announces liquidation application to the Singapore Exchange, which says it will conduct a "thorough investigation into the developments."
July 29: Swiber's lawyers from BlackOak apply for judicial management for a court-supervised rescue plan and dropthe liquidation plan after talks with lenders.
Aug 2: Swiber defaults on bond coupon payment; gets court approval to appoint officials from KPMG as interim judicial managers.

 

[LITTLEREDDOT]

DBS must explain Swiber debacle​

AUG 6, 2016

In the wake of the judicial management of energy services firm Swiber Holdings, DBS Bank owes depositors an explanation as to why it reportedly continued to lend money to the company weeks before it filed for liquidation ("High Court appoints interim judicial manager for Swiber"; Wednesday, and "Moody's flags 3 local banks' exposure / JPMorgan analysts cut rating on DBS"; yesterday).
Surely, red flags should have gone up.
Thousands of depositors are stunned at the $700 million exposure and they deserve an explanation.
DBS cannot merely say that it was totally unexpected and still within the bank's loss provision.

Christopher Tang Wai Leng

 

[LITTLEREDDOT]

Swiber Holdings, a penny stock DBS couldn't save, roils Singapore's oil hub, banks​

AUG 8, 2016

SINGAPORE (BLOOMBERG) - With a market value of S$50 million, Swiber Holdings Ltd hardly seemed the kind of company to cause a ripple in the financial markets. Yet, the near-liquidation of the penny-stock firm has set off tremors in Singapore's banking and energy industries.
The Singapore-based supplier to offshore oil and gas explorers, facing about $50.5 million of demands last month from various creditors, said July 29 that it seeks to operate under court supervision as it attempts to turn around its business. Two days earlier, it had filed a petition for liquidation, which was subsequently dropped following talks with lenders.
While Swiber is the latest victim of the collapse in crude prices, the spending cuts by explorers such as Royal Dutch Shell Plc and Statoil ASA are testing Singapore's position as a hub for the marine and offshore industry that accounted for 6.9 per cent of the city-state's manufacturing output in 2015. The rut is also hurting the nation's lenders including DBS Group Holdings, which said it may recover only half of its S$700 million exposure to Swiber and its units.
"The sector has been a drag on the overall gross domestic product," said Mr Song Seng Wun, an economist at CIMB Private Banking in Singapore. "The period of downturn could last longer. There will be pressure on all the players - large and small."

As a global financial hub, Singapore provides for 25 per cent to 35 per cent of commodities trading in Asia, according to International Enterprise Singapore, a government agency. It is also Asia's largest physical oil trading hub. Additionally, it is home to the world's largest bunkering port.
Singapore's marine and offshore industry, which includes the world's two biggest oil rig builders Keppel Corp and Sembcorp Marine Ltd, provides for 19 per cent of the island-nation's manufacturing jobs. The halving of Brent crude prices in the past two years is posing a risk to the sector and the country's economy, which is estimated to expand 1.8 per cent this year, the slowest pace in seven years, according to a Bloomberg survey.
The marine and offshore industries in Singapore aren't alone in facing challenges. Their counterparts in South Korea are undergoing restructuring after posting losses last year spurred by delivery delays. State-owned Korea Development Bank led other creditors to push shipyards to draw up aggressive measures to raise funds, cut capacity and jobs.

The Straits Times Index has fallen 3.9 per cent since Swiber's woes were made public. The FTSE Straits Times Oil & Gas Index, which tracks the marine and offshore engineering companies, dropped 6.3 per cent during the same period, while Ezra Holdings slumped 23 per cent and Ezion Holdings slid 11.6 per cent.
Swiber's shares plunged to 10.9 Singapore cents before trading was suspended on July 28, from as high as 88.4 Singapore cents about two years ago.
For the financial industry, Swiber's distress augurs more trouble. DBS, which provided a bridging loan to Swiber before the liquidation filing, has the biggest exposure to the troubled firm among Singapore's banks, according to court documents. Of the total S$700 million, DBS said July 28 it only expects to recover about half of that amount. About S$300 million of those loans are secured by collateral, including property and vessels, according to DBS, which reports its quarterly earnings on Monday.

DBS will make S$150 million of provisions following Swiber's financial trouble, the lender has said. The extra provisioning would be taken in the second quarter and cut DBS' 2016 earnings by 3 per cent, Goldman Sachs Group Inc said in a July 29 report.
"These developments are credit negative," Moody's Investors Service said on Aug 4, adding that the funds Singaporean banks are setting aside to cover souring energy exposures aren't enough. "The substantial upward revision to DBS' provisioning for its Swiber exposure is an indication that the current deterioration in the oil and gas industries could have a far stronger bottom line impact than previously expected."
DBS has built "a lot of" provisions and reserves ahead of time, and it is unlikely it will have an impact on its capital adequacy or the fundamental strengths of its balance sheet, chief executive officer Piyush Gupta told CNBC in an interview on Aug 4. The bank's common equity Tier 1 ratio stood at 14 per cent as of March.
Besides loans, Swiber defaulted on a S$150 million Islamic bond after notifying the stock exchange that it was unable to pay the coupon on the security due on Aug 2. The non-payment caused a cross-default on the company's four other outstanding notes, according to data compiled by Bloomberg.
Oil and gas-related loans accounted for 5.3 per cent of gross lending by Singapore banks as of December, a higher proportion than at banks in South Korea, Thailand and the European Union, according to Moody's. Of the 19 offshore service companies listed in Singapore, 10 companies recorded net losses in the first quarter, the rating agency has said.
The exposures of Oversea-Chinese Banking Corp and United Overseas Bank Ltd to offshore marine services companies amounted to 13 per cent to 18 per cent of their common equity Tier 1 capital and loan-loss reserves at the end of June, Moody's said in an Aug 1 statement. DBS had a total S$22 billion exposure to the sector at the end of March.
The Swiber case "may prompt banks to tighten lending to the sector", said Mr He Yuxuan, an analyst at Daiwa SB Investments (Singapore) Ltd. "If suppliers and other creditors cannot collect debts from Swiber, there may not be enough money to go down this chain." As lenders count their losses, the woes of the energy industry are far from over.
Keppel last month predicted a long, harsh "winter" in its rig-building business after reporting a 48 per cent plunge in net income in the quarter through June. Smaller rival Sembcorp Marine said profit in the period tumbled 90 per cent and warned that spending cuts in oil and gas will "continue to have a negative impact on the recovery process".
"Highly geared companies exposed to oil and gas sector with weak cash flows would remain under pressure," said Mr Joel Ng, an analyst at KGI Fraser Securities in the city. "The pressure on bank stocks would also be significant and may lead to less support from lenders and shareholders for any fund-raising in the future."

 

[LITTLEREDDOT]

Swiber imploded in just 6 weeks: DBS chief Piyush Gupta​

1 of 2

DBS Group chief executive officer Piyush Gupta. PHOTO: THE BUSINESS TIMES/ FILE

Grace Leong
Senior Business Correspondent

AUG 8, 2016

SINGAPORE - DBS Group Holdings chief executive Piyush Gupta said on Monday (Aug 8) that its client Swiber Holdings imploded in six weeks.
"There were no indications that this was coming," said Mr Gupta at a media briefing on the bank's quarterly results.
DBS earlier on Monday reported a 6 per cent drop in second quarter earnings after a jump in bad debt allowances for oil services firm Swiber. Provisions for non-performing loans more than doubled, led by a charge of S$150 million for Swiber, which has been placed under judicial management.

DBS revised up its total exposure to Swiber to S$721 million from S$700 million announced previously. Its total non-performing loans (NPLs) grew 31.1 per cent to S$3.26 billion in the second quarter, with NPL ratio sitting at 1.1 per cent, up from 0.9 per cent a year ago and 1 per cent a quarter ago.
Singapore's biggest lender also disclosed earlier on Monday that it had S$23 billion exposure to the struggling oil and gas sector, of which S$7 billion was to oil services firms excluding Swiber.
Swiber, which provides construction services for international oil and gas projects, stunned investors when it filed a petition last week to liquidate its operations after a US$200 million share sale to private equity firm AMTC fell through. The firm subsequently dropped the liquidation in favour of a plan to operate under judicial management, which would allow it to continue business under court supervision while it attempts to turn itself around.
"I still believe the best outcome for Swiber is the judicial management and getting its projects going again," said Mr Gupta.

He said S$403 million of DBS' total exposure to Swiber went to finance working capital for two projects.
"Eighty per cent of the first project is done. Fifty per cent of the second project is done. The question is 'Do you want to put in extra money to recover more?' ", said Mr Gupta. " Judicial management is still the most viable objective for Swiber."
Mr Gupta also said also said it was "uncertain" whether AMTC will come through with financing despite a report over the weekend by the Business Times that the deal is still alive.

 

[LITTLEREDDOT]

DBS caught off guard by Swiber's 'swift implosion'​

Other offshore firms may face knock-on effects in second half of the year: Bank CEO​

Grace Leong
Senior Business Correspondent

AUG 9, 2016

Offshore services firm Swiber Holding's financial implosion was so rapid and sudden its biggest lender DBS Bank was caught off guard, DBS Group Holdings chief executive Piyush Gupta said yesterday.
He added that other offshore firms could face knock-on effects in the second half of this year.
Recounting the Swiber saga, Mr Gupta noted that "Swiber imploded in six weeks". "This thing unravelled between late May and mid-July. So when people say you should have known, none of the indicators showed it," he said.

Offshore services firm Swiber stunned the market late last month by seeking to be wound up - then switching tack to place itself under judicial management. PHOTO: SWIBER HOLDINGS

• $721m​

  DBS' exposure to Swiber as of July 31.
  

  $403m​

  Of the $721 million, this amount is to finance working capital for two projects.
  

  $197m​

  For June and July bond redemptions.
  

  $121m​

  For mainly secured term loans for vessels, property and hedging purposes.

CLASSIC BANKER'S DILEMMA
If the projects get completed, I can recover $400 million. If they don't get completed, and the company folds, I'm out $400 million. It's a classic banker's dilemma. Do we put in more money to recover more or not?
MR PIYUSH GUPTA, DBS Group Holdings' chief executive.
"At the end of June, Swiber had zero overdues with us on any outstanding working capital. Its order backlog was $1.35 billion in February. By every dimension, at the end of the first quarter, you would say that the company was doing well. There's nothing to tell you until March or April that there was any problem," he said at a press conference on DBS' second-quarter results.
Late last month, Swiber stunned the market by seeking to be wound up - then switching tack to place itself under judicial management.
Mr Gupta also defended the bank's decision to extend additional loans to the company, which was based on two key factors.
One was the expectation of a US$200 million (S$270 million) cash infusion that was supposedly coming from London-based private equity firm AMTC, which had expressed interest in investing in Swiber. When the investment was delayed, Swiber turned to DBS to borrow additional sums to pay off bond redemptions that were due in June.

A month later, when another bond redemption was due, DBS decided to extend additional loans because, by then, there was a real risk of the company failing as there was still no investment from AMTC.
At the time, Swiber was handling two projects that, if completed, could see the bank retrieve some money, said Mr Gupta.
"If the projects get completed, I can recover $400 million. If they don't get completed and the company folds, I'm out $400 million. It's a classic banker's dilemma. Do we put in more money to recover more or not?"

The best way for Swiber to recover money was to get the projects done, he said.
Mr Gupta also remained uncertain if AMTC's funding was still on the table, despite a Business Times report that said AMTC was still keen on the investment.
Meanwhile, Swiber said total claims against the firm totalled US$99 million as of last Thursday.
DBS' total "exposure" - that is, all its loans, bonds and guarantees - to the oil support services sector is worth about $7 billion to firms other than Swiber.
Of that total, Mr Gupta said $2.7 billion was loaned to 90 companies, and one-third of that portfolio has weakness, as some of these companies are Swiber-linked. "So there will be some contagion in the second half of this year," he said. Another $2.3 billion was to five oil services companies, one of which "has weakness".
Last month, DBS' Swiber exposure rose about $70 million to $721 million. Of that, $403 million was to finance two projects, $197 million was for bond redemptions - repaying investors who bought bonds - in June and July, and $121 million was for mainly secured term loans for vessels, property and hedging purposes.
"Two-thirds of our exposure were in loans, and one-third in other credit exposures such as performance bonds," DBS chief financial officer Chng Sok Hui said.
The bank has set aside $400 million of allowances for its exposure to Swiber. Of this, DBS drew down $250 million from its own general allowance reserves, a fund that banks have to set aside for rainy days, while it took a charge of $150 million.
It expects to recover Swiber money from several sources: tangible assets such as property and vessels, and bills to be paid, Ms Chng said.

 

[winnipegjets]

He has Modi's protection. PAP is afraid of Modi. Modi can whack Sinkapore inside out. See how Modi whack Canada left, right and centre. India is invincible under Modi.

Sinkees better learn Hindi fast and accept the lordship of Modi. We have Indian President, time to have Indian PM.

 

[Loofydralb]

Last warning. Take your money out before it goes.

 

[Leongsam]

Things invariably go wrong once in a while. It's no big deal.

Overall I've been extremely satisfied with DBS's standard of service.

 

[Leongsam]

He has Modi's protection. PAP is afraid of Modi. Modi can whack Sinkapore inside out. See how Modi whack Canada left, right and centre. India is invincible under Modi.

Sinkees better learn Hindi fast and accept the lordship of Modi. We have Indian President, time to have Indian PM.

Modi and LHL are very good friends so there is absolutely nothing to worry about.

They regularly get together for some delicious banana leaf cuisine and these binging sessions have created a bond between the two that runs deep and protects Singapore from any harm.

In addition Modi finds LHL's pink shirts to be a real turn on and this has further cemented the close relationship between the two.

 

[A Singaporean]

This man has created so many good jobs for CECAs. A national day award is in order.

 

[LITTLEREDDOT]

DBS clears $600,000 cheque 'by mistake'​

Bank retrieves sum from customer's accounts after 82 days, but he calls action 'unlawful'​

A person walks past a DBS atm at Shenton Way. PHOTO: ST FILE

K.C. Vijayan
Senior Law Correspondent


AUG 9, 2016

DBS Bank has blamed "human error" and tightened its processes after a $600,000 cheque bounced 82 days after being cleared.
In a rare case, the uncrossed POSB cheque had been presented by customer Raymond Koh, 56, at its Woodlands branch on April 1 and credited into his account on the same day.
But on June 22, the bank notified Mr Koh that the sum had been wrongly credited as there were insufficient funds in the account of the person who had made the sum payable to Mr Koh.
The bank then deducted cash from two of Mr Koh's accounts to retrieve the $600,000.
A DBS spokesman told The Straits Times: "The isolated incident was due to an inadvertent human error.

Mr Koh says he was embarrassed when a cheque he made out to a law firm bounced after DBS' action.
"When we discovered that funds had been wrongly credited to the customer's account, we reached out to the customer to inform him that the funds would be debited from his account.
"We have since reviewed and tightened our processes."

The DBS move has left Mr Koh, a Johor Baru-based developer, in search of answers.
" I had full confidence in the banking system but I am very disappointed... that the bank can actually take so long to realise its mistake for such a huge amount," he said. "It did not give me reasons why this happened."
He had visited the bank's branch on April 1 to deposit the cheque into his account and was informed that the sum could be credited directly into his account as the cheque was not crossed and was payable to his name.

He said another bank worker had verified his identity and that a bank slip was issued to acknowledge receipt. "After that, I thought everything was in good order," he said.
Mr Koh, a DBS customer for "umpteen years", said he was also embarrassed and that his "integrity was at stake", as a $200,000 cheque he had made out on June 21 to a law firm was dishonoured as there were insufficient funds in his account following the DBS move.
Through his lawyer Peter Ong Lip Cheng, he alleged that the "unilateral" DBS withdrawals from his accounts without his consent were unlawful and unfair, and demanded that the bank restore the money to his account last month.
DBS, through its Allen & Gledhill lawyers William Ong and Kristin Chua, rejected his claims, pointing out that it had explained to him about the "inadvertent oversight" that had led to the bank wrongly crediting his account.
It pointed out that the terms and conditions governing the operation of Mr Koh's accounts with DBS provided for the bank at any time, without notice, to debit from Mr Koh's accounts any sums that were wrongly credited. It added that the bank had called Mr Koh and followed up with a letter to notify him, although it was not obliged to do so.
Mr Koh said he is considering further possible legal options.
Lawyers said the rare case, if pursued in court, would enable this area of the law, involving the bank and the customer, to be clarified.
Harry Elias Partnership lawyer Tan Chau Yee said that in law, the principle of "unjust enrichment" would apply. So, if the sums were wrongly placed, then the bank had a right to reclaim the money as it belonged to the bank. But he pointed out that a potential litigant could make out a case if he had suffered a loss as a result of a bank's error.

 

[LITTLEREDDOT]

DBS says 'standards raised' since 1MDB-linked dealings​

A construction worker talks on the phone in front of a 1Malaysia Development Berhad (1MDB) billboard. PHOTO: REUTERS

Wong Wei Han

AUG 9, 2016

DBS Bank had picked up on the accounts and fund flows linked to 1Malaysia Development Berhad (1MDB), but it had believed there were no illicit activities involved.
DBS was one of the banks named by the Monetary Authority of Singapore over "instances of control failings" and "weaknesses in the processes for accepting clients and monitoring transactions" related to 1MDB.
Mr Gupta said the bank had conducted its due diligence.
"A lot questions were asked, a lot of due diligence done, but our teams on the business were satisfied," he said. "In hindsight, were the accounts part of a complex (network)? Probably. Could we have done better in figuring it out? Of course we could have."
These lapses happened mainly three years ago, and since then, standards at DBS "have gone to a different level".
"We already tightened up a lot compared to 2013, partly because the MAS has also been tightening the standards over the last two to three years," said Mr Gupta.
"Last time, we would look at transactions and find them reasonable. Now, we ask two more questions. But there is still work to do."

The 1MDB investigations are ongoing, and it is unclear if DBS will be hit by a fine, Mr Gupta added.

 

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DBS and StanChart reiterate commitment to Singapore anti-money laundering laws amid 1MDB probe​

A man walks past the construction site of 1MDB flagship Tun Razak Exchange in Kuala Lumpur, Malaysia in March 2015. PHOTO: REUTERS

Grace Leong
Senior Business Correspondent

SEP 28, 2016

SINGAPORE - DBS Bank and the Singapore branch of Standard Chartered Bank on Thursdy (July 21) reiterated their commitment to compliance with Singapore's anti-money laundering laws and cooperating with regulators after they were among several financial institutions found to have lapses in such controls.
The Monetary Authority of Singapore earlier on Thursday disclosed that its preliminary findings show instances of control failings in DBS, and the Singapore branches of StanChart and Swiss bank UBS.
And in some cases, it found weaknesses in the processes for accepting clients and monitoring transactions, as well as "undue delay in detecting and reporting suspicious transactions."
A DBS spokesman told the Straits Times that the bank previously identified certain questionable activities and voluntarily reported these to the relevant authorities.
"Egregious financial crime is highly sophisticated and intentionally designed to evade systems and controls. ... We take our anti-money laundering obligations seriously and will continue to extend our fullest cooperation to regulators and law enforcement."
Standard Chartered also said it takes financial crime compliance very seriously.

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"When we discovered the suspicious transactions, we reported them and have been fully cooperating with the relevant authorities," a spokesman said.

It also said it has strengthened its anti-money laundering controls and processes and will continue to play an active role in the fight against financial crime.
"We would like to stress that the assessments by the MAS have not been finalised. In addition, according to the MAS statement, "……the MAS' inspections did not reveal pervasive control weaknesses or staff misconduct within these banks, unlike in the case of BSI Bank," it said.
UBS has not yet responded to the Straits Times' request for comment.

 

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DBS to take action against staff responsible for 1MDB-related lapses, including senior executives​

DBS said it made many enhancements since the 1MDB-related lapses, which had occurred in 2013 and 2014. PHOTO: THE BUSINESS TIMES

Ann Williams
Assistant Business Editor

OCT 11, 2016

SINGAPORE - DBS Bank said on Tuesday (Oct 11) it will be taking appropriate action against staff accountable for 1MDB-related lapses - including senior executives - after the bank was slapped with a $1 million fine by the Monetary Authority of Singapore (MAS).
DBS also said it "should have taken more rigorous action with respect to the questionable activity, even if it was intentionally designed to conceal another purpose".
The bank said it would be donating "profits attributable to our shortcomings" to a worthy cause.
MAS in a statement earlier on Tuesday said it had completed its inspections of DBS and UBS' Singapore branch in relation to their 1MDB-related fund flows and found no pervasive control weaknesses. Instead, the control lapses "relate to specific bank officers who failed to carry out their duties effectively".
DBS in its statement said it had made many enhancements since the lapses, which occurred in 2013 and 2014, and "are in a materially better position than before".

Asked for more details on the staff responsible for the bank lapses and the actions they face, DBS said it does not comment on specific employee matters.
"However, any staff who we feel could have done a better job in fulfilling their responsibility will be held accountable," the bank told The Straits Times. "In general, there is a wide array of possible consequences ranging from a warning, bonus impact to dismissal".

A spokesman for UBS' Singapore branch, which was fined $1.3 million for similar money-laundering lapses related to 1MDB funds, said on Tuesday the Swiss bank was "disappointed we did not do more to detect and report this earlier" and is "determined not to be used as a platform for financial crime".
Like DBS, UBS said it will also donate all profits from "this account" to the setting up of an industry-wide anti-money laundering programme.
This will be run by an independent educational body to help combat financial crime and reinforce Singapore's status as a financial centre which adheres to the highest standards, said UBS.

 

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MAS shuts down Falcon Private Bank in Singapore, slaps fines on DBS and UBS after 1MDB probe​

The reception area of Falcon Private Bank's Singapore office at Centennial Tower. PHOTO: REUTERS

Ann Williams
Assistant Business Editor

OCT 12, 2016

SINGAPORE - The Monetary Authority of Singapore (MAS) announced on Tuesday (Oct 11) that it is withdrawing the merchant bank status of Falcon Private Bank Ltd, Singapore Branch (Falcon Bank), for serious failures in anti-money laundering (AML) controls and improper conduct by senior management at the head office in Switzerland as well as the Singapore branch.
MAS said Falcon Bank's Singapore branch manager, Mr Jens Sturzenegger, was arrested by the Commercial Affairs Department (CAD) on Oct 5.
Falcon Bank is the second financial institution after BSI Singapore to be forced to cease operations here in the Republic's 1MDB probe. Before BSI, the last time MAS shut down a financial institution was in 1984 when it ordered the closure of Jardine Fleming (Singapore) Pte Ltd for serious lapses in its advisory work.
MAS also fined Falcon Bank S$4.3 million for 14 breaches of MAS Notice 1014 - Prevention of Money Laundering and Countering the Financing of Terrorism. The breaches include failures to adequately assess irregularities in activities pertaining to customer accounts, and file suspicious transaction reports.

MAS is also imposing financial penalties amounting to S$1 million on DBS for 10 breaches and S$1.3 million on UBS for 13 breaches of the same regulation. The two banks must also appoint an independent party to confirm that rectification measure have been "effectively implemented" and report their findings to MAS.
Singapore's central bank said the actions on the three banks follow supervisory examinations into 1MDB-related fund flows that took place through these banks from March 2013 to May 2015.
MAS' actions also come a day after two more former bankers at BSI Singapore were charged in court with 1MDB-related offences.

Said MAS managing director Ravi Menon in the statement on Tuesday: "Keeping Singapore a clean and trusted financial centre is a shared responsibility. The board and senior management of each financial institution play a pivotal role. They must put in place robust mechanisms to detect suspicious activities, promote strong risk awareness among their staff, and empower their compliance and risk management people. Most of all, they must set the tone from the top - that profits do not come before right conduct.
"MAS will work closely with the industry to ensure that standards are kept high and will take strong deterrent actions against institutions that fall short."
MAS said its investigations benefited from close cooperation with various overseas regulatory counterparts, in particular the Swiss Financial Market Supervisory Authority (FINMA).

It said clients and customers of Falcon Bank are assured that the merchant bank here has the full support of its head office which is financially sound. MAS is also working closely with FINMA to oversee an orderly closure of the merchant bank branch in Singapore.
Falcon Bank has been operating as a merchant bank in Singapore since August 2008. MAS conducted inspections on Falcon Bank in 2013 and 2015. The 2013 inspection found weaknesses in the bank's controls for client acceptance and transaction surveillance that led to breaches of AML requirements, said MAS. Falcon Bank paid a composition fine of S$300,000 for these breaches, and MAS instructed the merchant bank to strengthen its AML controls.
But the 2015 inspection uncovered an even larger number of regulatory breaches as well as serious failings on the part of head office senior management and the Singapore branch manager.
Detailing the lapses, MAS said:
- The merchant bank's head office failed to guard against conflicts of interest when managing the account of a customer who was associated with the bank's former board chairman Mohamed Ahmed Badawy Al-Husseiny. The former chairman misled and influenced the Singapore branch into processing the customer's unusually large transactions despite multiple red flags
- The improper conduct of the Singapore branch manager and certain senior managers at the head office had impaired the effectiveness of the Singapore branch's compliance function in discharging its responsibilities. Their interference was wrongful and egregious in nature, and contributed to substantial breaches of AML regulations.
- Falcon Bank has demonstrated a persistent and severe lack of understanding of MAS' AML requirements and expectations. Taking into account the totality of Falcon Bank's conduct, MAS' assessment is that the merchant bank will be unable to comply with these requirements and expectations going forward.
On DBS and UBS Singapore branch, MAS said it has completed its inspections of the two banks in relation to their 1MDB-related fund flows and found no pervasive control weaknesses. Instead, the control lapses "relate to specific bank officers who failed to carry out their duties effectively", said MAS.
There were deficiencies in the on-boarding of new accounts, weaknesses in corroborating the source of funds, inadequate scrutiny of customers' transactions and activities, and failure to file timely suspicious transaction reports, MAS added.
In its Tuesday statement, MAS also said it is finalising its assessment of Standard Chartered Bank, Singapore Branch, and will make an announcement in due course.
It has also referred the 1MDB-related transactions processed by Raffles Money Change to CAD for their follow-up investigation.

 

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MAS monitoring DBS Hong Kong case​

The Monetary Authority of Singapore said that DBS is cooperating with Hong Kong authorities regarding the case involving DBS Hong Kong. PHOTO: ST FILE

Lee Xin En

DEC 9, 2016

HONG KONG - The Monetary Authority of Singapore (MAS) is aware of the case involving DBS Hong Kong, whose employees were reportedly arrested over an alleged leak of customer data.
"As DBS's home regulator we expect DBS's business practices both in Singapore and abroad to be compliant with local laws and regulations," said an MAS spokesperson in an emailed statement today (Dec 9).
The central bank added that Singapore-based bank DBS is cooperating with Hong Kong authorities.
Hong Kong tabloid Apple Daily had reported on Thursday (Dec 8) that some 20 DBS employees were being investigated by Hong Kong's anti-corruption agency, the Independent Commission against Corruption (ICAC).
The employees, reportedly from the DBS Hong Kong sales team, had allegedly used bribery to obtain personal data of DBS clients.
The personal data was later passed on to a call centre in mainland China which held telephone promotions for high-interest loans. Commissions were then shared between the direct sales team and the call centre.
The report also prompted the Hong Kong Monetary Authority (HKMA) to issue a statement of concern today (Dec 9), saying it would "follow up with the bank associated with the case".

Apple Daily reported that recently, a number of Hong Kong customers had complained about receiving loan marketing calls from people claiming to be DBS staff.
After carrying out internal investigations, the bank found that most of the telephone calls originated from a call centre in the mainland, even though DBS has never worked with the centre on telephone promotions. A report was later made to the ICAC.
Earlier this week, ICAC reportedly raided the homes of several current and former DBS employees.
An ICAC spokesman told Apple Daily that the agency does not discuss individual cases.
When contacted, a DBS spokesman told The Straits Times on Thursday (Dec 8): "DBS Hong Kong takes our obligations to curtail financial crime very seriously and the bank will cooperate fully with any law enforcement agency on their investigations."
"Together with our regulators and the industry, we intend to intensify our efforts in collaborating and fighting against financial crime."

 

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Singapore banks' sour loans in focus as oil service sector stresses​

ATM machines from UOB, DBS and OCBC Bank, at Changi Airport terminal 2. PHOTO: ST FILE

FEB 10, 2017

SINGAPORE (REUTERS) - DBS Group Holdings and smaller rival United Overseas Bank are set to report their lowest quarterly profit in at least two years, hurt by bad loans provisions for a battered oil services sector.
Nearly a dozen Singapore-listed firms in the offshore services sector have sought to restructure their bonds and loans over the past two years to stay afloat, hit by a slump in orders as oil prices remain low by historical standards.
Stress in the sector, highlighted by Swiber Holdings' decision last year to restructure under judicial management, does not appear to have abated. Ezra Holdings this month flagged it may have to take a US$170 million writedown on a subsea services joint venture.
All three of Singapore's listed banks reported increases in third-quarter charges for soured loans, with DBS in particular booking a doubling to S$436 million. The extent of further provisions in the fourth quarter and the outlook for 2017 will be key focus as the lenders report next week.
"To a certain extent, the credibility of managements' is on the line as well when they say there are sufficient provisions being provided for and we'll see whether this is the case," said Christopher Wong, senior investment manager at Aberdeen Asset Management Asia, which owns shares in the banks.
Slowing loan growth - now low single digit growth from double digit growth just two years ago - as China offshore loan demand and regional trade weakens - is also clouding prospects for the lenders.
DBS, Southeast Asia's biggest bank, is expected to show a 6.6 per cent profit decline to S$936 million, its weakest performance since the quarter to December 2014, according to the average estimate of six analysts polled by Reuters.

No 2 lender OCBC is set to report a 10.8 per cent fall in fourth-quarter net profit to S$856 million, its lowest level in three quarters, while profit at UOB is set to drop 7.4 per cent to S$730 million, the lowest in more than three years.
While some analysts see the banks as well-provisioned, CIMB analyst Jessalynn Chen said the market had not fully factored in asset quality concerns.
Some specific provisions were low at under 20 per cent as the loans were collateralised by vessels and other assets, but that might not be sufficient, she said.
"The problem is the valuation of the vessels could be written down, especially for companies with more specialised or purpose-built assets that are unable to find new orders to support cash flows," she added.
OCBC reports on Feb 14, DBS on Feb 16 and UOB on Feb 17.