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Reuters
August 4, 2010
SINGAPORE
SINGAPORE'S
central bank on Wednesday asked DBS Group to set aside S$230
million (US$170.5 million) additional regulatory capital for
operational risk following the breakdown of the bank's network on July
5.
Analysts said the demand for regulatory capital shows that
the central bank is sending a message to all banks operating in the
city-state that it will not tolerate banking services disruptions in
one of Asia's main banking centres.
Banking services at the
Singapore branches and automated teller machines at DBS and its unit,
POSB, were disrupted following technical problems last month. The
services were restored within a few hours.
Singapore, which is
the Asian headquarters for many private banks such as Credit Suisse,
competes against Hong Kong in the fields of wealth management and funds.
"This
incident has revealed weaknesses in DBS Bank's technology and
operational risk management control," the central bank said in a
statement.
MAS also highlighted several steps DBS should take to ensure such incidents are avoided.
The
central bank also said it has recently written to the CEOs of all
financial institutions to remind them of maintaining robust technology
risk management systems.
"MAS will not hesitate to take
appropriate supervisory action against any financial institution which
fails to meet the standards," it said.
DBS said in a statement
the additional regulatory capital would result in the bank's proforma
Tier 1 capital and total capital adequacy ratio to come down by 0.2
percentage points to 12.9 percent and 16.3 percent respectively.
"DBS
would like to assure customers that taking into account the regulatory
capital charge, our total capital adequacy ratio is still comfortably
above the required levels," DBS CEO Piyush Gupta said in the statement.
DBS,
which conducted an investigation with its main vendor IBM to
determine what caused the first such major disruption for the bank,
said it has taken several steps to prevent such breakdowns in the
future.
"DBS is deeply sorry for the outage and once again, my
apologies to our customers for all the inconvenience caused," Gupta
said in the statement. - Reporting by Nopporn Wong-Anan
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