THE TEMASEK REVIEW

By Damon Yeo, Business Correspondent

On the same day DBS announced their new CEO, the piece of  news was quickly overshadowed by another which was about how their legal team will be setting itself up to defend a High Court case against the bank. (read article here)

From various reports, it appears that DBS will be arguing that they had made “an obvious clerical mistake” and that any investor should have noticed it. Those investors, of course, included hundreds of elderly and uneducated investors who were clearly led to believe that the High Notes 5 investments that they had purchased from the bank were relatively risk-free.

This case is perhaps the most interesting civil case in Singapore since the NKF saga and it will be interesting to see how the High Court will eventually rule, bearing in mind that MM Lee had already openly reprimanded these investors.

This however, is not the bank’s first brush with bad publicity. In fact, over the years, DBS had often been in the spotlight for a series of unsavoury incidents.

Arguably, the biggest blunder of them all was in November 1998, when DBS acquired POSBank for S$1.6bn. At that time, DBS claimed that this acquisition will generate economies of scales provide impetus for the bank to become a bigger player in the regional stage. (read report here)

Before being bought by DBS, POSBank was a statutory board of the government and their primary mission was to encourage savings amongst Singaporeans and help the man-on-the-street. (read article here) Profit-making was secondary.

It all changed when DBS came in. Hundreds of thousands of savers lost their tax exemptions on interest earned and in 2000, much to the furore of the Singaporeans from the lower-income group, POSBank introduced monthly service fees for small accounts. Out goes POSBank’s image as warm and friendly organisation.

DBS’s rivals also questioned why POSBank was never up for bid in the first place. A quick check on DBS’s ownership tells it all – government-linked Temasek Holdings was a significant long-time shareholder of the bank.

For DBS, the acquisition was no all sweet too. During the early days of the acquisition, DBS was undecided on keeping the POSBank franchise or merging it altogether into the DBS name.

In 2001, they decided to spend S$1million to rejuvenate the POSBank brand name, but in 2002, announced that the POSB franchise was bleeding $44million a year. The dual network of branches and ATMS, a legacy of the transfer, is still evident today, 11 years on. Definitely not a win-win merger, one has to say.

In June 2002, a Chinese national and a simple computer virus caused the bank much embarrassment.  30-year-old Sun Rong used a Trojan program and made off with $62,000 from 21 DBS accounts. He had no accomplices and left the country before DBS even noticed that their “cyber vault” had been broken into. Just for the record, Sun was never apprehended.

About two years later, DBS upped their ante and caused themselves further pain overseas. In an ultimate blunder, 83 safe deposit boxes from branch in Hong Kong were dumped and crushed at a scrap yard. (read article here)

The bank realised the error only after customers raised the alarms over the missing boxes. A full apology to the customers did not come after two working days later. The bank later admitted that a lack of oversight and clear orders lack to the debacle, but insisted that customers had signed contracts freeing the bank of liability for any damages to the items placed in safety boxes. 

In December last year, DBS drew flak from the some members of the public when they selected Focus on the Family as its charity. (read article here)

This particular charity is not only Christian, but has taken up a strong anti-abortion and anti-homosexuality stance. This move by DBS was not just distasteful, but had also alienated customers who have different religious and sexuality beliefs.

Earlier this year, DBS got itself into yet another PR disaster, when it publicly rebuked one of its employees, Ms Josie Lau, for taking on top post at Aware, a fully volunteer group advocating woman rights. (read article here)

The public reacted angrily to the bank’s reaction, as the position which Ms Lau was taking up was a prestigious role in the local community. Some high-ranking Human Resources personnel from other multinational corporations went as far as to saying that DBS should be proud that someone from the bank wants to take up the position.

On the business side of things, DBS has no doubt been strong. Ever expanding into various markets in Asia, staying out of trouble in the sub-prime debacle and steadily stream of profits are evidence of the bank’s success in this aspect.

Perhaps, time is now for DBS to look beyond their shareholders and focus on their other stakeholders – their customers and their employees.

About the Author:

Damon is a proud graduate of Nanyang Technological University in 2004 with a degree in Accountancy. He is currently working in the finance department of a UK Bank. He is also a regular contributor at redsports.sg.

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