The Monetary Authority of Singapore (MAS) has imposed an additional capital requirement on DBS Bank D05 following the widespread unavailability of DBS Bank’s digital banking services on March 29 and a subsequent disruption to its digital banking and ATM services on May 5. Together with the additional capital requirement imposed on DBS in February 2022 (of $930 million), this translates to approximately $1.6 billion in total additional regulatory capital.
As at March 31, DBS reported a common equity tier 1 (CET1) capital of $50.7 billion (translating into a CET1 ratio of 14.4%) and total capital of $58.3 billion, translating into a capital ratio of 16.5%. DBS announced it will pay out $1,083 million in dividends for its 1QFY2023, translating into a payout ratio of 42%.
The additional capital requirement on DBS Bank is now a multiplier of 1.8 times to its risk-weighted assets for operational risk, an increase from the multiplier of 1.5 times that MAS applied in February 2022 following the November 2021 disruption. MAS may subsequently vary the size of the multiplier depending on the outcome of ongoing reviews, the MAS statement says.
The central bank's supervisory action will have an incremental 0.3 percentage point impact on DBS's CET1 ratio ended March 31, reducing it to 14.1% from 14.4%.
MAS has also required DBS Bank to take immediate steps to improve the resiliency and recoverability of its existing system to minimise disruption of its services to its customers.
Ho Hern Shin, Deputy Managing Director (Financial Supervision), MAS, says that DBS has "fallen short" of MAS’ expectations for banks to deliver reliable services to their customers.
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"The repeated inconvenience caused to the public is unacceptable. The additional capital requirement imposed at this time underscores the seriousness with which MAS treats this matter. DBS Bank must spare no effort in dealing with the underlying issues leading to these disruptions," she adds.
DBS's CEO, Piyush Gupta, apologised for the digital disruptions, saying that the bank's customers "rightly expect more [from them]" and that the bank is "committed to doing better".
"Following the March 29 incident, the bank convened a special board committee to oversee a full review of our technology resiliency with an independent external expert. We will complete the review as a matter of utmost priority and implement all recommendations expeditiously," he adds.
Shares in DBS closed 23 cents lower or 0.72% down at $31.90 on May 5.
