DBS Hit By More Capital Minimums After ‘Unacceptable’ Outage

(Bloomberg) -- DBS Group Holdings Ltd. was slapped with higher capital requirements after a pair of disruptions to its digital banking services that Singapore's regulator called “unacceptable.”

A disruption in DBS' digital systems Friday saw retail customers face difficulties performing banking and payment services through its apps and websites, as well as some ATM services. The systems returned to normal within 45 minutes, Southeast Asia's biggest lender said in a statement on its Facebook page on Friday.

The Monetary Authority of Singapore responded by boosting the bank's capital requirements for the second time in over a year, with DBS's required capital rising by S$1.6 billion ($1.2 billion) in total. DBS said in its first-quarter results that its capital ratios were well above the required minimums.

It was a second incident in a matter of weeks. In late March, DBS' digital banking services in Singapore were disrupted for about 10 hours, and the bank had to extend branch operations by two hours. That had drawn criticism from the city-state's regulator and apologies from its top executives. In 2021, the bank suffered one of its worst digital disruptions in the past decade.  

“DBS Bank has fallen short of MAS' expectations for banks to deliver reliable services to their customers,” Ho Hern Shin, MAS deputy managing director, said in the statement. “The repeated inconvenience caused to the public is unacceptable.”

The outages are a setback for the bank's earlier investments in new technology, where it was named the world's best digital bank by Euromoney in 2021. DBS said the regulator's actions will have an incremental 0.3% point impact on its common equity tier 1 capital ratio, reducing it from 14.4% to 14.1%.

The capital increase came from a boost to operational risk-weighted assets. That's a measure devised by regulators that determines how much capital the bank needs to hold against potential losses from a range of risks including human error, external threats, fraud and litigation. 

In February 2022, the central bank imposed S$930 million in regulatory capital following the earlier outage in the previous year.

The MAS also said DBS must expand an ongoing review of its tech resiliency that had been launched after the March incident. The regulator said the causes of the two issues this year appear to be distinct. 

The bank must also take steps including “enhanced monitoring, more comprehensive testing and additional system redundancies, in order to minimise disruption of its services to its customers,” the MAS said. 

--With assistance from Chanyaporn Chanjaroen, Michael J. Moore and Linus Chua.

(Adds earlier capital requirement imposition in eight paragraph. An earlier version corrected the time frame for the two penalties.)

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