MAS has noted DBS’ explanation for the failure and will review its investigation report on the incident. MAS will also assess the outcome of this investigation and the extent to which the bank has failed to meet the recommended standards set out in the Internet Banking and Technology Risk Management Guidelines before determining the appropriate regulatory action to take.

The Monetary Authority of Singapore

Too much at stake

It is unrealistic to expect no S'pore bank will fail

Letter from David Boey

LIKE many other companies, Singapore banks wish to extend their geographical footprint to tap offshore business opportunities and grow their bottom lines.

But, banks are different from other commercial or industrial enterprises.

Firstly, banks serve important functions in the local economy, intermediating between their depositors and their borrowers.

They lend to the large multinationals and to the SMEs, which are mostly ignored by the global banking giants. In the process, banks help them to grow.

Secondly, a significant part of their funding is derived from their non-bank customers — ordinary people like you and me — who place much of their life savings with the banks. Their deposits are protected, but only up to the coverage level of deposit insurance, which stands at $20,000.

What will happen if one of the banks runs aground?

While the management of the banks will try to be prudent, it is their business to take risks; if they are overly cautious, they will likely achieve little and returns will be meagre. However, human judgement and decision-making are just that — human.

Seemingly well managed banks, even global behemoths, have failed. It is unrealistic to expect that no Singapore bank will ever fail.

Adequate capitalisation is a defence, but too much of it is a drag on return.

However, even with a capital adequacy ratio of, say, 15 per cent, a bank has 6.67 times as much risk-weighted assets as capital, and this is after taking the credit risk of assets that are considered to be not so risky at less than their full face value.

Already, the three Singapore banks are probably too big to fail. Reducing their number will ensure that they will be too big to fail. But only because taxpayers’ money will be used to prevent the financial system from collapsing.

Depositors, too, may suffer, as deposit insurance may prove insufficient.

Let’s link all ATMs

Letter from Ashok Kumar J

I REFER to “Left without cash” (July 6).

In Singapore, some bank ATMs are already linked. For example, ABN Amro, HSBC, Standard Chartered and participating Citibank and Maybank ATMs are connected under the ATM5 network. Bank customers of any of these five banks can use any ATM that bears the ATM5 logo, regardless of bank.

Customers of UOB and OCBC can also use ATMs belonging to either bank for a small fee.

But the biggest bank in Singapore, DBS, is not part of either network. I have frequently come across a long queue of people lining up to use a DBS/POSB ATM when there is another unused ATM belonging to another bank nearby.

Why don’t we bring all the bank ATMs in Singapore under one common network? Customers of any bank could then use the ATM of their choice for a nominal charge, or even for free. It has already proved successful overseas. For example, UnionPay in China links the ATMs of 14 major banks and many other smaller banks.

If we could have a common network, it would help avoid overcrowding. It would also save time, as users would no longer have to search for the right ATM. It could also reduce operating costs by allowing more efficient deployment of ATMs.

I wonder if it would have also helped avoid disrupting access to banking services if one particular bank’s network fails.

Could the Monetary Authority of Singapore or the Association of Banks in Singapore look into this?

WHO  did the reporter speak to ? ? ? ?

The MAS BUiLDiNG ? ? ? ?

The MAS lOgO ? ? ? ?

The MAS ghOst ? ? ? ?

is this a FAILURE ? ? ? ?

SMRT CHiEF  said it was a SYSTEM  CONSTRAiNT ? ? ? ?

wOuld this be an IBM  SYSTEM  CONSTRAiNT ? ? ? ?

In this AGE of STUPiD,

there sUddEnly  APPEARS  to  HAVE  many

  CONSTRAiNTed  CHiEFS 

in  cOuntrIes and cOrpOrates ? ? ? ? 

Left without cash ...

All DBS and POSB branches remained open for an extra two hours, from 4.30pm to 6.30pm, to help customers with their banking needs.

According to analysts, a breakdown of this scale is generally unexpected here and usually more common in the region’s emerging markets. They added that the lender could also consider beefing up its infrastructure.

SiNGAPORE is nOw a 3rd WOrld natiOn wIth 3rd WOrld tOlent ? ? ? ?

Sias Research investment analyst Liu Jinshu said: “I would say that DBS would probably have to incur some costs, costs to upgrade its IT infrastructure, costs to tighten its IT controls and things like that to prevent a relapse of this incident.”

Speaking to reporters at an event last night, DBS Group Holdings chief executive Piyush Gupta said: “Actually, we have very good safeguards. We have multiple redundancies built into our systems and it’s actually quite perplexing that the redundancies did not kick in as we normally would expect them to.

“We’re currently doing thorough investigations with our vendor IBM to understand why the redundant systems did not kick in.”

Mr Gupta added that he does not think it was a case of sabotage, adding that customer database had not been compromised as a result of the glitch.

Responding to media queries, the Monetary Authority of Singapore said banks are required to investigate promptly the causes of system breakdowns and take immediate measures to rectify system failures and restore customer services.

Subsequent action is also required to strengthen the system and prevent recurrence.

“MAS assesses banks’ compliance with these requirements, and will take appropriate supervisory action where necessary,” said its spokesperson.

Meanwhile, observers say the delayed transactions such as bill payments, and Nets or credit card transactions, should be cleared within 24 hours.

"very  good  safeguards"  is  prObably a typO  errOr.

the cOrrectiOn  wOuld  prObably  bE

####  very  gOOd  OFFguards  ####

We have multiple redundancies built into our systems and it’s actually quite perplexing that the redundancies did not kick in as we normally would expect them to.

DBS Group Holdings

chief executive Piyush Gupta

please don't claim that they are off-guarded

In the first place, there is no evidence that they are guarding against anything... 

why should they guard when they have all the reason that they won't fail

probably 10years later, Singapore is not big enough for multiple bank... need to consolidate to 1 bank so the bank have competitive advantage in global market...