DBS Group Holdings Ltd (SGX: D05) seems to be getting a tonne of bad press lately. First, there was the collapse of one of its borrowers, Swiber Holdings Limited (SGX: BGK), a provider of services in the oil & gas industry, in late July and early August. Then in October, DBS Group became the only Singapore-based bank to be fined by the Monetary Authority of Singapore for compliance issues related to funds that are linked to the scandal-plagued Malaysian sovereign wealth fund, 1MDB. And just this Thursday, the media in Hong Kong reported that 20 current and former employees from the Hong Kong…
DBS Group Holdings Ltd (SGX: D05) seems to be getting a tonne of bad press lately.
Then in October, DBS Group became the only Singapore-based bank to be fined by the Monetary Authority of Singapore for compliance issues related to funds that are linked to the scandal-plagued Malaysian sovereign wealth fund, 1MDB.
And just this Thursday, the media in Hong Kong reported that 20 current and former employees from the Hong Kong division of DBS Group are being investigated by Hong Kong’s anti-corruption agency, the ICAC (Independent Commission Against Corruption).
As of the time of writing, DBS Group has yet to make any official announcement on the matter. An article by Bloomberg on this stated that DBS Group has disputed the number of former and current employees involved.
Some of DBS Group’s staff in Hong Kong had allegedly gotten hold of personal data of some of the bank’s clients through illegal means. These employees then passed the information to a third party call centre in China, which used the data to market high-interest loans to the affected clients. The DBS Group staff involved got to share commissions earned by the call centre, according to Apple Daily, the Hong Kong media outlet that did the reporting.
This incident, if true, indicates a serious breach of trust by DBS Group to its clients. And trust is the most important element for a bank. Is the incident a one-off event concerning a few rogue employees? Or is it part of a deeper cultural issue within DBS Group?
One of the largest banks in the United States, Wells Fargo, had recently experienced something similar, when the bank was revealed to have created fake accounts for customers. Although Wells Fargo’s management initially tried to pin the blame on a few misbehaving employees, it turns out that the ultra-competitive culture within the bank was likely to have played a huge role in the scandal.
It would be interesting to see how DBS Group reacts to the situation. Would it face the facts and address the issue directly, if there was indeed wrongdoing? Or would it ignore the problem and hope it dies down with time? More importantly for investors, is this just a one-off event or as I had mentioned earlier, part of something deeper?
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own shares in any companies mentioned.