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DBS bank to lay off 900 staff in Singapore, Hong Kong

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November 8, 2008

DBS bank to lay off 900 staff in Singapore, Hong Kong
Singapore's DBS Group, Southeast Asia's biggest bank by assets is cutting 900 staff to trim costs amid the global credit crisis, after recording a slump in third quarter net profit, AFP quoted the bank as saying Friday.

Chief executive Richard Stanley said most of the cuts, accounting for six percent of the group's workforce, will be made by month's end in its Singapore and Hong Kong offices.

The job reductions were announced at a town hall-style meeting with staff on Friday.

"To be a streamlined organisation, I believe we must run a tighter ship... This is a painful decision for DBS and for me personally," Stanley told a news conference after the meeting.

"We have been vigilant on costs but as the economy enters a more difficult and uncertain phase, many financial institutions around the world and in Asia have made head count reductions," he added.

"To be more productive and efficient, we will restructure and streamline the organisation. Regrettably, this has resulted in the need to reduce our workforce."

DBS is the first major Singaporean firm to announce job cuts of such magnitude, and one analyst said it was a sign of more layoffs after the economy slipped into recession in the third quarter.

"Being the biggest local boy, it will send a very strong message to Singaporeans that what the government has been warning about (job losses) is happening already," CIMB-GK Research economist Song Seng Wun told AFP.

"There will be more retrenchments across all industries next year. Our view is that no industry will be spared."

Stanley, who was named to head DBS in February, said however that the cuts were not related to losses from its issuance of financial products linked to the collapsed US investment bank Lehman Brothers.

They also did not reflect the bank's financial position.

"DBS remains strong and sound," he said. "The tough measures we are taking now will enable us to confidently ride out this storm and emerge stronger when this global economic crisis is over."

Earlier Friday DBS said net profit in the three months to September fell 38 percent as market-related income took a hit from the global financial crisis and bigger provisions.

Third quarter net profit totalled 379 million Singapore dollars ($256 million), down from $610 million in the same period last year, it said in a statement.

Net interest income in the September quarter grew two percent to $1.07 billion from last year but net fee and commission revenues dropped 22 percent to $316 million.

Other non-interest income plunged 87 percent on the year to 11 million dollars.

The bank said it set aside $129 million in provisions, compared with just 10 million dollars a year ago, partly to cover its collateralised debt obligations, securities backed by a range of assets including risky home mortgages.

It also set aside $70 million as compensation to certain customers who bought its now worthless Lehman Brothers-linked products.

DBS was the last of three local banks to report earnings for the September quarter.

Oversea-Chinese Banking Corp said earlier this week third quarter net profit fell 13 percent while United Overseas Bank reported last week a 5.1 percent drop in profit for the same period.

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