DBS has served S’poreans well?


DBS has been instrumental in helping Singapore’s early economic development – can it try to help ordinary Singaporeans more, like the times of the former POSB?

I refer to the article “DBS took risks and absorbed downsides for the country in its early years: PM Lee” (Straits Times, Aug 5).

It states that “DBS played a crucial role in Singapore’s early industrialisation, taking risks and absorbing downsides to benefit the country but not necessarily the bank itself

DBS provided companies with financing on attractive terms and convinced multinational corporations to set up manufacturing facilities here.

The bank faced another major period of transformation in 1998, during the Asian Financial Crisis, when the banking industry was progressively opened up to more international competition. Soon after, DBS merged with POSB and had to take on a full spectrum of customers with differing needs.

He noted that the bank today is more than holding its own in a much more bracing environment, operating and competing at a totally different level and giving both customers and shareholders reason to be pleased.

In Singapore, Mr Lee said, it has always focused on bringing greater value to customers and supporting the nation’s development agenda, including its POSB initiatives and moves to make the bank more inclusive and serving children, the elderly, full-time national servicemen and people on public assistance.

Mr Seah said: “While we live in a fast-changing world, and continue to reimagine banking, one thing that we remain true to is our sense of purpose – that what we do impacts lives and livelihoods.””

According to the article ‘Here’s convincing proof that Singapore’s restructuring is on track‘ (Aug 17, 2013 (synopsis from DBS Group Research)) –

Real median income growth = Success of restructuring? 

So this brings us to the ultimate end goal of this entire restructuring exercise. The restructuring is aimed at increasing the real median income of Singaporeans by 30% in the current decade. Therefore, a better gauge on the success of the restructuring would then be the improvement made in the real median income.”

3.1% p.a. real median income growth?

“In this regard, real median income has increased by an average pace of 3.1% per annum since the announcement of the ESC recommendations.”

Real median growth of 30% next 10 years on target?

“At the current pace, real median income will be 35% higher than what it was in 2010. This is precisely what policymakers have aimed for. By this measure, restructuring is smack on track.”

Real median income growth was – 0.6 & – 2.3% in 2011, 2012?

The real median income growth (excluding employer CPF contribution) in 2011 and 2012 wasminus 0.6 and minus 2.3 per cent respectively.

So, how did the article get “real median income has increased by an average pace of 3.1% per annum since the announcement of the ESC recommendations (in 2010)”?

Including employer CPF contribution?

Was it using the real median income growth (including employer CPF contribution)?

Even PMO said its not appropriate?

In this connection, I wrote a letter to the media, “asking why a real median income growth rate of -0.6% for 2011 was used in the calculation of the National Bonus for political office-holders, and the Prime Minister’s Office and MOM came out to clarify:

“MOM’s 1.0% real median income growth rate for employed Singaporeans included the employers’ CPF contributions while the -0.6% real median income growth rate used by PMO for the National Bonus calculation did not include it.

PMO said it had computed the National Bonus payout using income figures sans the contributions as it was felt that changes to employers’ CPF rates are decided by the Government and, hence, should not be linked to the payout for political office-holders.” – TR Emeritus link, Apr 7, 2012

So, even the PMO concedes that the real median income growth (excluding employer CPF contribution) is the more appropriate measure.

14.5% lower & not 35% higher next decade?

Therefore, instead of “At the current pace, real median income will be 35% higher than what it was in 2010. This is precisely what policymakers have aimed for. By this measure, restructuring is smack on track.” – may be it should be “ At the current pace, real median income will be 14.5% lower than what it was in 2010. This is precisely what policymakers have not aimed for. By this measure, restructuring is smack off track .”

Both productivity and income have failed?

As to “The change in productivity has averaged -0.6% per annum in 2011-12 and has dipped further to -2.0% in 1H13. This is a far cry from the original target of 2%-3% set by the ESC, according to DBS, which then begs the question: Is restructuring working.

“The answer is yes, restructuring is raising productivity and real incomes,” said DBS” – since both productivity and real median income growth (as I have pointed out above) have both failed miserably – restructuring can’t by any stretch of the imagination be working well.

Reassess strategies?

Consequently, I suggested that the  Economic Strategies Committee (ESC) reassess itself and its strategies.

According to The Business Times, “In 1998, POSBank was sold to DBS Bank, another Temasek-linked company, making DBS the largest bank in Singapore. Two years on, DBS sold its stake in DBS Land to Pidemco Land, also a government-linked company, to create property giant CapitaLand. Again, no other suitors were reportedly allowed.”

Today, DBS is one of the major investments of the Temasek Holdings.

The late former President, Mr Ong Teng Cheong “in his later years, he also opposed the sale of POSB (Post Office Savings Bank) to DBS (The Development Bank of Singapore) in 1998 during his last year in office. He felt that the sale was procedurally inappropriate and did not regard the president’s significance as the guardian of the reserves. This was due to the fact that POSB at that time was a government statutory board whose reserves came under the president’s protection …”

According to the article “Customers annoyed over more ATMs dispensing only $50 notes” (Straits Times, Jul 30, 2014)

Cannot tell you how many “No $10″ ATMs?

– “But Singapore’s biggest bank, DBS Bank, which also operates POSB and its ATMs, declined to give the number or proportion of its ATMs issuing only larger bills.”

I was rather intriqued by the above “decline to give the number”. So, I looked for clues in the article.

2 of the banks have 12 “No $10″ ATMs?

Since “Checks with the three local banks indicate that OCBC is the only bank which still issues $10 bills at all its roughly 600 ATMs.

Fewer than 2 per cent of United Overseas Bank’s (UOB) more than 600 ATMs do not issue $10 notes.

– Does it mean that only about 12 ATMs (2% of UOB’s 600) out of OCBC and UOB’s total of about 1,200 ATMs – do not issue $10 notes?

97% of “No $10″ ATMs belong to 1 bank?

As to “Deputy Prime Minister Tharman Shanmugaratnam, also Finance Minister and minister in charge of the Monetary Authority of Singapore (MAS), replied that 85 per cent of the roughly 2,700 ATMs here dispense $10 notes”

– Does it mean that about 405 ATMs (15% of 2,700) do not issue $10 notes?

Deducting UOB’s about 12 ATMs – Does it mean that about 393 (405 minus 12) ATMs belong to DBS?

If so, then does it mean that about 97% (393 divide by 405) of all the ATMs that do not issue $10 notes, belong to DBS?

The “People’s Bank”?

I find it sad that what was affectionately known as “the people’s bank”, our national savings bank – which as market watchers said at the time – was transferred to Temasek/DBS at a very low price without any substantive debate in Parliament – continues arguably, with scant regard and consideration to the fact that there are many poor and low-income people in Singapore. For example, whilst the former POSBank (before it was transferred to DBS) had no monthly fees – DBS subsequently started to implement a $2 monthly fee for accounts (now known as ‘POSB Everyday Savings Account’) with ‘Minimum Average Daily Balance (MADB)’ below $500.

For example, there were then (2014) more than 200,000 who earn less than $1,000 a month, and about 400,000 who earn less than $1,200.

Why always cannot tell you?

Finally, with regard to “A spokesman for DBS, which has more than 1,100 ATMs, said some ATMs configured to dispense only $50 notes have been changed to dispense $10 and $50 notes. “For ATMs that dispense only $50 notes, we noticed that while the number of withdrawals has decreased, the overall cash withdrawn has remained at a consistent level,” she said. “This indicates that customers may be making fewer trips to withdraw the amount they require.”

– Can we be told how many ATMs exactly have been changed to dispense $10 notes too? And by the way, the decrease in the number of withdrawals may simple mean that people have gone to ATM’s that issue $10 notes.


Singapore’s corporate bonds’ default rate has hit more than 2.6%, relative to the historical default rates in the United States 

According to the article “DBS is the leading bookrunner for companies which defaulted on Singdollar bonds” (theonlinecitizen, Jul 14) – “According to a Business Times report today (‘Insolvency limbo: the SGD bond market‘, 14 Jul), the Singdollar bond market is grappling with an unprecedented number of insolvencies.

Data compiled by BT shows that since Nov 2015, at least 13 issuers have defaulted on a total of 23 Singdollar bonds by missing coupon payments, failing to repay note holders at maturity, filing for judicial management, filing for bankruptcy protection and in one case breaching a financial covenant.”

As to “It represents S$3.2 billion in face value of Singdollar bonds and perpetual securities rocked by defaults, or 2.6 per cent of the S$123 billion outstanding Singdollar corporate bonds, which also include government agencies and statutory boards” – what is the default rate, if we exclude the bonds issued by Singapore “government agencies and statutory boards”?

In this connection, I understand that bond default rates are typically calculated separately for corporate bonds and government or municipal bonds.

In this regard, “Default rates have been quite low in the corporate bond market over time, averaging 1.47% of all outstanding issues in the 32-year period measured. Investment grade bonds defaulted at a rate of just 0.10% per year, while the default rate for below-investment-grade (high yield) bonds was 4.22%.

  • The vast majority of defaults have occurred among the lowest-rated issuers. The 31-year average for securities rated AAA (the highest rating) and AA were 0.0% and 0.2%, respectively” (“Default Rates and Bonds“, www.thebalance.com, Apr 20, 2017)

“Among the 13 defaulters, 10 continue to remain stuck in various stages of restructuring while two have been liquidated. Interestingly, from the data compiled by BT, it shows that DBS is the leading bookrunner or underwriter of 11 out of the 13 bond defaulters, including 1 which was liquidated.

When asked if the bank has taken steps to improve disclosures during the bond IPO process since then, Clifford Lee, head of fixed income at DBS, gave a run-of-the-mill reply, “DBS has consistently through the years, applied best practice disclosure standards used in international offerings for its bond deals across markets, including the Singdollar bond market.”

“This entails making applicable business and risks disclosures in offering documents, together with financial disclosures from audited and/or reviewed financials,” he said.”

With regard to “In some cases like Hyflux, they even issued such risky corporate perpetuals in small denominations to the man in the street, allowing Ah Pek and Ah Ma to buy them through ATMs.

In any case, all the investors are easily “sold” by the high yields dangling in front of them especially with the low interest rate regime operating in the last number of years. But now, the credit cycle has peaked, turning some of the high-yield instruments into “junk bonds””.

Leong Sze Hian


About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.