DBS can resume all activities, but must still keep additional capital buffer

Multiplier of 1.8 times to risk-weighted assets for operational risk imposed on bank will be retained: MAS

A TEMPORARY restriction on DBS Bank from undertaking non-essential activities is over.

This comes after the Monetary Authority of Singapore (MAS) on Tuesday (Apr 30) said it will not extend a six-month pause on nonessential activities that it had imposed on the bank, after “substantive progress” was made on remediation efforts following service disruptions. The pause ended on Tuesday.

However, the multiplier of 1.8 times to DBS’ risk-weighted assets for operational risk, which was imposed after disruptions earlier in 2023, will be retained, the central bank said on Tuesday.

This multiplier will be lifted when MAS is “satisfied that DBS has demonstrated the ability to maintain service availability and reliability, and handle any disruptions effectively”.

The pause was to ensure that the bank “kept a sharp focus on restoring the resilience of its digital banking services”, MAS said. During the six-month period, DBS was suspended from making changes to its IT systems, except for those related to security, regulatory compliance and risk management. It was also unable to acquire new business ventures.

While DBS’ implementation of its remediation plan is still ongoing, MAS said it has made “substantive progress to address the shortcomings identified from service disruptions experienced by its customers in 2023”.

The bank’s technology risk governance, system resilience, change management and incident management have been improved, the monetary authority added.

In a response to the MAS announcement, DBS said that the ability to resume its non-essential services “will not dilute its focus on strengthening technology resiliency and enhancing digital service availability”.

Works-in-progress include continued simplification and strengthening of its systems architecture, building deeper expertise in centres of excellence for critical third-party technologies, broadening the use of artificial intelligence to further strengthen change management, and creating more monitoring tools so as to be able to detect potential issues more quickly, the lender said.

MAS 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 to promptly recover its services and communicate to its customers in a clear and timely manner,” the central bank said.

Said DBS chief executive officer Piyush Gupta: “The pause allowed us to reflect on the areas we needed to improve on, and to better address them. While progress has been made, we are committed to building on this further.

“Our pledge is to ensure that innovation is well balanced with resiliency so as to meet our customers’ expectations for reliable, seamless and effortless banking.”