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MAS hits DBS with additional capital requirement of S$930 million after November's digital banking outage

MAS hits DBS with additional capital requirement of S$930 million after November's digital banking outage

View of the DBS Bank building in Singapore. (File photo: AFP/Roslan Rahman)

SINGAPORE: Last year's multiple-day outage of DBS Bank's digital services - one that the Monetary Authority of Singapore (MAS) termed "a serious disruption" - has resulted in MAS imposing an additional capital requirement on the bank.

DBS will now be required to apply a multiplier of 1.5 times to its risk-weighted assets for operational risk.

This translates to S$930 million in additional regulatory capital, said MAS on Monday (Feb 7). The sum is based on DBS' reported financial statements as at Sep 30, 2021.

In comparison, this is four times higher than the amount for a similar disruption that DBS experienced in 2010. MAS had applied a multiplier of 1.2 times to DBS’ operational risk weighted assets, equivalent to about S$230 million in additional regulatory capital.

In a press release issued shortly after MAS' statement, DBS said the extra capital requirement announced on Monday would have a 0.4 per cent point impact on DBS Group’s capital ratios until remedial actions are completed.

It added that this would have no impact on dividend policy.

"In a digital era, customers rightly expect to have seamless and uninterrupted access to online banking services 24/7. This is something we take very seriously," said DBS CEO Piyush Gupta.

MAS said it had noted "deficiencies in DBS Bank’s incident management and recovery procedures", resulting in the "prolonged duration" of the disruption, which lasted from Nov 23 to Nov 25 last year.

Many DBS and POSB customers were unable to access online banking services during the outage. Following the incident, the bank had attributed the disruption to "an issue with (its) access control servers" and said it was not a cyberattack.

On Monday, MAS said it had ordered DBS to appoint an independent expert to conduct a "comprehensive review" of the incident, including the bank’s recovery actions.

This review is also required to assess how a similar incident can be prevented in future, said MAS.

"DBS Bank must rectify all shortcomings identified from the review and implement measures to ensure that any future disruption to its digital banking services is resolved quickly and adequately," the central bank added.

"The additional capital requirement will be reviewed when MAS is satisfied that DBS Bank has addressed the identified shortcomings."

Source: CNA/ac(zl)

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