MAS slaps $930m additional capital requirements for DBS

This comes after the bank’s digital services went offline in November.

The Monetary Authority of Singapore (MAS) has imposed an additional $930m (US$692.14m) capital requirements on DBS Bank Ltd. following the widespread unavailability of the bank’s digital services from 23 to 25 November 2021.

MAS is now requiring DBS Bank to apply a multiplier of 1.5 times to its risk-weighted assets for operational risk. 

According to MAS, it noted the deficiencies in DBS Bank’s incident management and recovery procedures to restore its digital banking services to a normal state, resulting in the prolonged duration of the disruption.

Additionally, MAS has directed DBS Bank to appoint an independent expert to conduct a comprehensive review of the incident, including the bank’s recovery actions. An independent review is also required to assess how a similar incident can be prevented in future. DBS Bank is tasked to rectify all shortcomings identified from the review and implement measures to ensure that any future disruption to its digital banking services is resolved quickly and adequately. The additional capital requirement will be reviewed when MAS is satisfied that DBS Bank has addressed the identified shortcomings.

“MAS requires financial institutions to have robust controls and processes to ensure the reliability and resilience of their IT systems and the continuous delivery of essential financial services to their customers. MAS will take appropriate supervisory action against any financial institution that falls short of our regulatory expectations,” Marcus Lim, assistant managing director of banking and insurance at MAS said

DBS response

In a response to MAS imposition, DBS said it has already taken steps to improve its digital resilience and incident response.

"These actions are but a starting point. Over the course of the next few months, together with an independent expert, we will continue to review our systems and processes to ensure that we do better going forward," DBS CEO Piyush Gupta said.

According to DBS, the additional capital requirement will have a 0.4% point impact on DBS Group capital ratios until the remedial actions are completed. Inclusive of the capital impact arising from the Citibank Taiwan consumer banking acquisition, DBS’ pro-forma CET-1 ratio as at 30 September 2021 would be 13.4%. The pro-forma ratio is at the upper end of our target CET-1 range, and hence will have no impact on dividend policy.