MAS orders DBS to set aside extra S$930m in capital after widespread digital banking outage in November

SINGAPORE — Following a major disruption to DBS bank's digital banking services last November, the Monetary Authority of Singapore (MAS) has imposed an extra capital requirement for the bank to set aside S$930 million. 

This requirement refers to the amount of capital banks have to set aside as a buffer to cover unexpected losses and keep themselves solvent in a crisis.

"MAS has required DBS bank to apply a multiplier of 1.5 times to its risk-weighted assets for operational risk," Singapore's financial regulator said in a statement on Monday (Feb 7). 

This translates to an additional amount of about S$930 million in regulatory capital, based on DBS' financial statements as at September last year.

This amount is four times higher than what was imposed on DBS in 2010, following a similar disruption to its digital banking services then, MAS added. 

DBS' digital banking services were disrupted for two days from Nov 23 to 25 last year, with customers reporting that they had problems accessing its services. 

MAS had "noted deficiencies in DBS bank's incident management and recovery procedures to restore its digital banking services to a normal state, resulting in the prolonged duration of the disruption". 

It also said that it has directed the bank to appoint an independent expert to conduct a comprehensive review of the incident, including the bank's recovery actions.

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

"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 extra capital requirement will be reviewed when MAS is satisfied that DBS has addressed the identified shortcomings, the authority added. 

Mr Marcus Lim, assistant managing director of banking and insurance at MAS, said: "MAS requires financial institutions to have robust controls and processes to ensure the reliability and resilience of their IT systems and the continuous delivery of essential financial services to their customers.

"MAS will take appropriate supervisory action against any financial institution that falls short of our regulatory expectations."

Responding to the MAS announcement, DBS said in a statement on Monday that the capital requirement will have no impact on its dividend policy.

The additional S$930 million in regulatory capital will have a 0.4 per cent point impact on DBS Group’s capital ratios “till remedial actions are completed”.

DBS' chief executive officer Piyush Gupta added that in the digital era, customers “rightly expect” to have seamless and uninterrupted access to online banking service round the clock.

“This is something we take very seriously,” he said. “Since the November incident, DBS has taken a series of actions to improve the resilience of our services and incident response.”

He also said that these actions are a “but a starting point”. 

“Over the course of the next few months, together with an independent expert, we will continue to review our systems and processes to ensure that we do better going forward.”