DBS EXPOSURE TO US SUB-PRIME CDOS
SINGAPORE , 7 August 2007 - In response to queries from investors and the press, DBS Asset Management, a 100%-owned subsidiary of DBS Bank, disclosed that it manages two CDO portfolios with underlying assets totaling USD 1.03 billion. Neither CDO has underlying assets with exposure to US sub-prime mortgages.
DBS Bank has also distributed USD 1.7 billion of structured products involving CDOs backed by AA or AAA rated collateral to institutional, private banking and sophisticated or knowledgeable retail investors. None of these products have exposure to US sub-prime mortgages.
As disclosed earlier last week, DBS Bank said it had investments in collateralised debt obligations (CDOs), including collateralised loan obligations (CLOs), amounting to approximately USD 850 million. The rating profile of the portfolio comprises 15% in AAA, 30% in AA and 55% in A. Of the total portfolio, 22% or USD 188 million are in asset-backed securities (ABS). These ABS CDOs have a diversified portfolio of underlying high grade and mezzanine assets, including a portion of US sub-prime mortgages. DBS' exposure to these ABS CDOs is through A, AA or AAA tranches.
As part of its risk management processes, DBS Bank continues to carefully monitor its CDO/CLO portfolio and is comfortable with its positions. DBS intends to hold the CDO portfolio until maturity and does not expect any losses to have a material impact on earnings or capital.
Headquartered in Singapore, DBS is one of the largest financial services groups in Asia with operations in 15 markets. The largest bank in Singapore as measured by assets, and a leading bank in Hong Kong, DBS' "AA-" and "Aa1" credit ratings are among the highest in the Asia-Pacific region. DBS has leading positions in corporate, SME and consumer banking, treasury and markets, wealth management, securities brokerage, equity and debt fund raising. Beyond the anchor markets of Singapore and Hong Kong, DBS serves corporate, institutional and retail customers through its operations in China, India, Indonesia, Malaysia, Thailand and The Philippines. More information about DBS Group Holdings and DBS Bank can be obtained from our website www.dbs.com.