DBS may resume non-essential banking activities but higher capital buffer stays: MAS

The Monetary Authority of Singapore (MAS) has said it will not extend a six-month restriction on DBS Bank’s non-essential banking activities past April 30.

The pause was among penalties imposed on Nov 1 in response to disruptions to the bank’s services in 2023.

However, Singapore’s largest bank must continue to set aside additional regulatory capital by applying a multiplier of 1.8 times to its risk-weighted assets for operational risk – a penalty imposed in May 2023 – the authority said in a statement on April 30.

Such buffers help banks deal with unexpected losses and remain solvent in times of crisis.

In 2022, DBS Bank was required to apply a multiplier of 1.5 times to these assets after it suffered its worst outage in more than a decade the previous year.

In 2023, MAS imposed measures restricting the bank’s non-essential IT changes and barring it from acquiring new business ventures until April 30, following disruptions to DBS’ digital banking and ATM services in March and May that year.

On its decision to retain the capital requirement, MAS said on April 30: “The multiplier of 1.8 times will be lifted when MAS is satisfied that DBS Bank has demonstrated the ability to maintain service availability and reliability, and handle any disruptions effectively.”

MAS said the bank had made “substantive progress to address the shortcomings identified from service disruptions experienced by its customers in 2023”.

It added: “Improvements have been made to its technology risk governance, system resilience, change management and incident management.”

In its remediation process, some longer-term measures by DBS Bank, such as the simplification and strengthening of the bank’s systems architecture, are still being worked on.

MAS said it will closely monitor DBS’ progress on the remaining deliverables and the effectiveness of the measures implemented.

“In the event of service disruptions, MAS expects DBS Bank to promptly recover its services and communicate to its customers in a clear and timely manner,” it added.

Responding to the announcement, DBS Bank said it has been implementing a comprehensive technology resiliency road map since May 2023 to ensure that services run more smoothly for customers. Chief executive Piyush Gupta said: “The pause has allowed us to reflect on the areas we needed to improve on, and to better address them... In the months ahead, we will continue to prioritise resources to strengthening technology resiliency.”

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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