Sign up | Log in



 23 Dec 2008

Related Stories

November 29, 2008
Bad loans at Singapore banks set to rise

November 6, 2008
Bad debts hit Singapore’s OCBC net profit

October 23, 2008
US Credit Crunch Fallout
S’pore’s DBS set aside $53.4m to compensate investors

October 22, 2008
Singapore: Charter changes to cope with recession

October 16, 2008
Singapore minister assures  banking system in good health

October 12, 2008
Global Financial Turmoil:
Investors in Singapore urge central bank to help

Singapore’s DBS to raise capital through S$4b rights issue

Southeast Asia's biggest lender, DBS Bank, plans to raise nearly S$4 billion through a rights issue, reported Singapore’s television broadcaster Channel News Asia.

The lender will issue one new ordinary share for every two existing shares held as at 5pm on December 31. More than 760 million shares will be offered at S$5.42 apiece – a 45 per cent discount to its last traded price on Friday, December 19.

The bank's latest move follows its S$1.5 billion capital-raising exercise in May through the sale of preference shares that paid investors 5.75 percent per annum.

In a statement, DBS CEO Richard Stanley said: "DBS is initiating this capital raising exercise from a position of strength. Our business continues to perform well despite the challenges of the global economic downturn.

"We have a robust balance sheet characterised by strong liquidity, capital adequacy ratios and asset quality."

The rights issue is expected to increase DBS' Tier 1 capital ratio by 11.8 percent, up from its current 9.7 percent. This will make DBS the second local bank, behind OCBC Bank, in terms of Tier 1 capital strength.

Brian Hunsaker, banking analyst, Fox Pitt Kelton, said: "If you look at their core Tier 1 ratio and you benchmark it to the two domestic peers, it does look a little bit weak.

"It's obviously a difficult environment and the fact that it's coming now, it'll be placed at a steep discount. It does cause some dilution to the existing shareholders, but I guess in light of the uncertainties, it's probably a prudent thing for them to do."

The issue will be underwritten in full by Citigroup Global Markets Singapore, Goldman Sachs (Singapore), J.P. Morgan (S.E.A.), Morgan Stanley Asia (Singapore) and UBS.

DBS's largest shareholder, Temasek Holdings, has agreed to subscribe for up to one-third of the rights issue through a sub-underwriting arrangement. This includes Temasek taking up its rights entitlement of 27.6 percent.

DBS directors also intend to take up their entitlements under the rights issue in full.

The bank said the additional capital will not be used for merger and acquisitions, or for extraordinary provisions. Instead, the lender will continue to focus on organic growth in its key markets such as China, Taiwan, India and Indonesia.

Despite this, some analysts said DBS may come under pressure for capital as the number of non-performing loans is expected to rise.

The lender has already said it expects to book more specific allowances this quarter for its SME loans business in Hong Kong and China.




Comment on this Article. Send them to

Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited

submit your comment in the box below 





1.  Verifier

1. Verifier

For security purposes, we ask that you enter the security code that is shown in the graphic. Please enter the code exactly as it is shown in the graphic.
Your Code
Enter Code

Home | About Us | Contact Us | Special Feature | Features | News | Magazine | Events | TV | Press Release | Advertise With us

Our Products | Work with us | Terms of Use | Site Map | Privacy Policy | Refund Policy | Shipping/Delivery Policy | DISCLAIMER |

Version 5.0
Copyright © 2007-2015 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand