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First of all, there won't be any take-over as all the 3 Banks still have enough 'muscles' to ride thru this crisis. Funding is another problem!
Secondly, DBS is too big for OCBC to buy-out as it has got a very strong parent and its Balance Sheet is still very strong. To make it worse, funding is too expensive now. Merger... no way as OCBC would want to expand itself at its own comfortable ways.
Share Holders' Equity in the Balance Sheet is different from the Shareholders' Equity in Tier 1 Capital. And more over, Tier 1 Capital is only used to cover unexpected losses (like Lehman Minibonds saga in DBS's case). It is different from expected losses provided and covered by provisions, reserves and current year profits. Cheers!
Maybe teeth's suggestion that DBS 'erase' POSB from its Book and set up a new entity and return to the old POSB to serve the people's needs (profits only come second) and under different Managements. I think I read somewhere that DBS is going to set up something like that - not sure exactly how it is going to be done. Cheers!
Merger??? Uncle Koh n Richard not happy lah. Many others lose the job liao, including oversea branches.
Change sign boards?? chialat ah, old uncle n aunti panic, as they so use to soh shi brand, tot another bank bankrupt loh. heart attack ah, dun play play.
as chinese wise saying, 3 legs are better balance loh. he he,.
Funny, why can't the only 2 banks left be OCBC and UOB?
Then govt exchange it's stake in DBS for OCBC shares, in the end the same.
And OCBC is in a healthy position to launch a takeover, whereas DBS looks bad from any angle and seem impossible to launch a takeover.
Maybe with one stroke, use a rubber bend to erase POSB, then again become no-1 again lohh.
How too take over DBS when their mindset is long oredi fix, somemore gov own bank leh..At one stage, S'pore mentioned oni needed two big local bank. one is DBS, the other can be UOB or OCBC. .
goondoo ( Date: 22-Oct-2008 09:26) Posted:
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That's why we have said go for O... rather than D...
O.. has declared that they did not expose much to CDO and there was a writeoff some time back. Expect D... to go down further.... I've chopped off at 17.5 (few hundred loss)...On hindsight, it was a good move. Learning the chopping kongfu from some of the sifus here..Painful but a must for situation like this. Will pick up D.. later on below 10 (
Sars level?)
Will go down somemore today, and finish at ~$12.00
Latest analyst reports show that DBS has about S$54b in treasury almost double that of the other 2 banks. About only S$18b is in treasury notes and Sg Govt bonds which is safe, rest of S$36b is about 180% of total equity.
DBS equity at S$20b, at about 10% tier 1. If they take a 20% write down on their treasury, it would amount to about S$7b and bring equity down to $13b, which will bring Tier 1 to about 7. This scenario will be like Citigroup in the U.S. where they need a big infusion of capital. The treasury amounts are all in analyst reports.
With a big rights issue just to restore equity to pre-crisis level, which won't contribute to EPS bottomline, shareholders like me are in for a big collapse in share price.
DBS business: Interest income 81.6%; fees n commission income 13.1%; trading income 1.6% remaining 3.7%.
Outlook:
Sep 08, Co inked MOU to offer full suite of China Unionpay card products n svcs in mkts it operates in, including PRC n Indon. 1H08 net int income rose 6% to $2.12b as benefit of higher loan vols was partially offset by 14 basis pt decline in net int margins to 2.07%.
Net fee income rose 2% to 695m while other non-int income fell 15% to $352m. Expenses rose 2% in line with revenues, to 1.34b, with cost-income ratio at 42% NPL rate rose fr 1% in previous qtr to 1.4%. Ttl CAR stood at 13.8% with tier 1 ratio at 10% compared 13% and 9.2% resp inprevious qtr. Jul 08. Co opened rep office in Hanoi and upped 71.74% state in AXS InfoComm to 76.06% for $0.72m. Feb 08, Co acq good bank assets of ROC's Bowa Bk.
IF AK not mistaken, it closes all Bk branches in India lately, sifu, pse verify.
2 qtr profit was $652, including one time charges of $16m, which comprised an impairment charge for invs in TMB BK, partially offset by gains fr sale of office buildings in HK.
Its 3qtr 07 mtg was on 26 Oct 07, hence next mtg is around the corner. its HN5 issue not settle yet. It has much greater proportion of med n high risk investment in hand, as compare to the other 2 major local banks. 1H08 div was 20 cts.
OCBC:
Its 1H08 fell as strong growth in net int income was offset by decline inprofit fr life assurance, lower gain fr invs securities n losses in derivatives n securities dealing. Last 3qtr mtg was on 6 Nov 07. 1H08 div was 14 cts. Ttl CAR was 13.6% with tier 1 ratio at 12.3% compare to 1 qtr 08 13.55 and 12.8% resp.
UOB:
1H08 profit up 2.5% as operating profit growth was offset by higher impairment charge n lower share of assocs' profit. 1H08 div was 20 cts.
Capt position remained strong with total and tier 1 CARs at 14.4% n 10.2 % resp.
Hmm, u cannot compare net profit directly, the other 2 banks are much smaller in size and shareholder's equity. There's a high possibility of DBS sliding to $8 in the next few weeks.
And DBS results may show impairment such that it's Tier 1 go below 8, and then it will need a huge rights issue to bring Tier 1 back to 10. At current depressed markets, the rights may even go for 1 to 1 at as low as $3 or $4, and that will dilute the EPS by 50%, the other 2 banks prob won't need to go to drastic measures like rights issues. The huge impairment to Tier 1 for DBS has been highlighted by many analysts.
The other better solution (which minimize DBS shareholder's loss) is if OCBC launch a hostile takeover on DBS, afterall OCBC tier 1 is at a healthy 13.4 and impairment is not expected to be significant.
If that's the case, I don't think Bank A would still be around and most likely would have merged with Bank C or other Banks may have consistently purchased from the open Market and triggered a take-over :) There won't be any management to talk about anymore 
Here we're talking about DBS and may be the data below could give viewers a better picture.
Nett Profit of 3 local banks for FY05, 06 and 07 :-
DBS OCBC UOB
FY05 (S$M) 824 1298 1709
FY 06 2269 2002 2570
FY 07 2383 2071 2109
Cheers!
goondoo ( Date: 21-Oct-2008 17:44) Posted:
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Should not fall lower then $6/-, just my tot as it is still very remote..err guess oni ...ya.
goondoo ( Date: 21-Oct-2008 18:08) Posted:
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At the rate, DBS is free-falling, guess it won't take long to breach it's 2003 low of $8 and then 1998 low of $5. Just hope it won't become a penny stock like COSCO.
If bank A has double the assets of bank B, but consistently produce 1/2 the profits of bank B and therefore, only has 1/2 the mkt capitalization of bank B, can Bank A be considered to have good management when both banks operate in the same country? I am not saying that bank A will definitely fall to 1/2 the mkt cap of bank B, but trying to prove the point of the importance of management in maximising shareholder return or at least protect their capital investments.
Strong in assets doesn't necessary mean strong in market capitalization. Market capitalization depends on future earnings as seen by the Market. DBS happened to be in a position not favorable in an economy recession environments. It has nothing to do with good or bad managements. SImply put, DBS is the most aggressive in expansion overseas and loans. As such, their earnings would be most affected during a downturn economy and write-off would be much bigger than the OUB and OCBC. Another unfavorable event is the Lehman Saga that DBS was involved!
Therefore, The Market 'rightly' pare down their holdings in DBS and depressed its share price. I'm sure DBS has enough 'muscles' to withstand these ripples in the pond! Cheers!
Of course I understand the difference between Asset size and market cap.
But, if DBS has the largest asset size by a wide margin compared to UOB and OCBC, yet the smallest market capitalization, it means that is very badly managed relative to the other 2 banks and the market penalize DBS very heavily for the much poorer performance relative to the other 2 banks.
There is a difference between Asset Value & Market Capitalization Value. The former is the value in the Balance Sheet and the later is the value of share price in total dealing in the Market. It is still the Largest Bank in SE Asia in assets! Remember the share price is never the reflection of 'actual' value of a Company - it is decided by the Forces Of The Market! Cheers!
Poor service at IMM branch. Today I went to enquire about Aviva products sold by them. The RM (looks like a bit pregnant) was pushing their responsibilities lby telling us that we can also find out ourselves by phoning Aviva directly. When they sell their product, they are very polite, but when we enquired what is the situation, they seems not interested to ans us. DBS stand Dead bank of Spore.
Tomorrow, I will transfer my money to OCBC Fixed Deposit.
Interesting observation...