MAS hikes DBS’ additional capital requirement to hefty $1.6 billion after latest “unacceptable” service outage

SINGAPORE: The Monetary Authority of Singapore (MAS) has increased the additional capital requirement it has imposed upon DBS to a hefty $1.6 billion after its third service outage in 18 months that unfolded yesterday (5 May).

Calling the latest service disruption “unacceptable,” the central bank’s Deputy Managing Director (Financial Supervision), Ms Ho Hern Shin, said: “DBS Bank has fallen short of MAS’ expectations for banks to deliver reliable services to their customers. The repeated inconvenience caused to the public is unacceptable.”

She added, “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.”

The new additional capital requirement DBS Bank has been slapped with will be a multiplier of 1.8 times to its risk-weighted assets for operational risk, up from the multiplier of 1.5 times that MAS applied in February 2022 following a previous disruption in November 2021.

MAS said that the size of the multiplier may be varied by MAS depending on the outcome of ongoing reviews.

Following the March incident, DBS CEO Piyush Gupta and Chairman Peter Seah expressed embarrassment and apologised for the March disruption. Mr Gupta promised to set up a special committee to investigate the issue. At the same time, Seah bowed to shareholders at the Annual General Meeting and expressed regret over the “very unfortunate and disappointing” incident.

The bank had previously taken steps to improve its recovery protocols and engineering team, but Mr Gupta acknowledged that the recent disruption was a sobering experience for Singapore’s largest bank. He said, at the time:

“As such a well-known digital and technology bank, this embarrasses us. We are committed to doing better. Ensuring uninterrupted digital banking services 24/7 has been our key priority. Unfortunately, we fell short of it and are truly sorry.”

Revealing that he will lead a special committee to conduct a thorough investigation of the outage, as directed by MAS, Mr Seah said: “Our customers have every right to expect more of us. So, underscoring the gravity of the matter, we will be convening a special board committee with immediate effect to conduct a full and detailed investigation of the incident.”

MAS has said that it now requires the review it instructed DBS to carry out to cover yesterday’s incident as well, even though the causes of the two incidents appear to be distinct from each other.

MAS has also directed DBS Bank to take immediate steps to improve the resiliency and recoverability of its existing system. This includes enhanced monitoring, more comprehensive testing and additional system redundancies, all aimed at minimising the disruption of services to the bank’s customers.

DBS apologises for latest service outage that comes just over a month after “embarrassed” chairman bowed at AGM