Private banks to disclose all fees and charges in bond sales

SINGAPORE – Come March, private banks in Singapore will have to disclose fully all fees, charges and rebates in bond sales under enhanced standards in the Private Banking Code of Conduct, the Association of Banks in Singapore (ABS) said on Tuesday (Nov 22).

Private banks have come under criticism in recent months from investors over their sales tactics following bond defaults in Singapore amounting to over S$1 billion. Among these is the default of former market darling Swiber Holdings, an energy services firm which sold an unusually high proportion of its bonds to the wealthy clients of banks in Singapore. Swiber, currently under judicial management, missed a payment on a bond coupon in August, which triggered cross defaults on all its issues.

The enhanced standards expand on the existing requirement for private banks to ensure that a client is informed of the key terms of transactions, the ABS said. Last month, the standards were enhanced to require specific disclosure of bond rebates. By March, these will be further enhanced to require disclosure of quantifiable benefits and the mandatory dissemination of fee schedules, as well as the prohibition of retrocessions for products purchased under discretionary portfolios, the ABS said.

Ms Tan Su Shan, Co-Chair of the Private Banking Industry Group and Group Head of Consumer Banking & Wealth Management, DBS Bank said: “The recent changes to enhance the transparency of fees and disclosure of bond placement fees is welcomed and fully supported by banks here as this is good practice in light of the growing demand for bonds by private clients. For Singapore to continue to build a sustainable and strong wealth management hub here, it is important for industry players and stakeholders to continue to evolve and enhance these standards, so this is a move in the right direction.”

Mr Marc Van de Walle, Global Head of Products, Bank of Singapore, said: “These enhanced standards serve to safeguard the integrity and reputation of Singapore’s financial system and further entrench its position as Asia’s premier wealth management hub.” - WITH AGENCIES