Stricter Regulatory Measures After Prolonged Banking Disruption
The Monetary Authority of Singapore (MAS) has imposed an additional capital requirement of S$930 million on DBS Bank following a major digital banking outage that occurred in November last year. The disruption, which MAS described as a “serious” incident, left customers unable to access online banking services from November 23 to November 25.
DBS is now required to apply a 1.5-times multiplier to its risk-weighted assets for operational risk, significantly higher than the 1.2-times multiplier imposed after a similar incident in 2010, which amounted to S$230 million in additional capital. The figure for the latest requirement is based on the bank’s financial position as of September 30, 2021.
Impact and Response
The increased capital requirement will affect DBS Group’s capital ratios by 0.4 percentage points until necessary remedial actions are completed. Despite this, the bank has assured that its dividend policy remains unchanged.
DBS CEO Piyush Gupta emphasised the importance of uninterrupted digital banking services in today’s era, stating: “This is something we take very seriously.” The bank attributed the disruption to issues with its access control servers and ruled out cyberattacks.
MAS Mandates Comprehensive Review
MAS identified deficiencies in DBS’ incident management and recovery processes, which contributed to the extended duration of the outage. The central bank has directed DBS to engage an independent expert to conduct a thorough review of the incident and propose measures to prevent future occurrences.
DBS must address all identified shortcomings, with MAS set to reassess the additional capital requirement only after the bank fully rectifies these issues and ensures robust measures are in place for quicker resolution of any future disruptions.
