As a penalty for a two-day service disruption of DBS Bank’s digital bank services in late November, the Monetary Authority of Singapore (MAS) has ordered the bank to set aside extra capital to guard against operational risks.
“MAS requires financial institutions to have robust controls and processes to ensure the reliability and resilience of their IT systems and the continuous delivery of essential financial services to their customers,” said Marcus Lim, assistant managing director (banking and insurance), MAS, in a statement.
“MAS will take appropriate supervisory action against any financial institution that falls short of our regulatory expectations.”
In the announcement, the Singapore central bank said it noted deficiencies in the bank’s incident management and recovery procedures to restore its digital banking services to a normal state, resulting in the prolonged duration of the disruption.
DBS, Singapore’s biggest bank, has to apply a multiplier of 1.5 times to its risk-weighted assets for operational risk, which is equivalent to an additional S$930 million in regulatory capital based on reported financial statements as at 30 September, 2021.
The amount is four times higher than the amount for a similar disruption of digital banking services at DBS in 2010, when MAS had applied a multiplier of 1.2 times to DBS’ operational risk weighted assets, equivalent to approximately S$230 million in additional regulatory capital.
The MAS has also directed DBS Bank to appoint an independent expert to conduct a comprehensive review of the incident, including the bank’s recovery actions and how a similar incident can be prevented in the future.
“DBS Bank must rectify all shortcomings identified from the review and implement measures to ensure that any future disruption to its digital banking services is resolved quickly and adequately,” said the authority.
The additional capital requirement will be reviewed when MAS is satisfied that DBS Bank has addressed the identified shortcomings.
