UPDATE ON DBS EXPOSURE TO CDOS

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DBS total CDO exposure only 1% of assets;
No change in US sub-prime mortgage exposure

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SINGAPORE , 27 August 2007 - Following our announcement of 7 August 2007, DBS would like to provide an update on its exposure to collateralised debt obligations (CDOs), including its exposure to a SGD1.4 billion asset-backed commercial paper (ABCP) conduit called Red Orchid Secured Assets (ROSA).

As previously disclosed on 7 August, DBS had distributed USD 1.7 billion (SGD 2.6 billion) of structured products involving CDOs backed by AAA/AA rated collateral to third-party customers. This amount includes SGD 1.1 billion of CDOs held by ROSA . Most of the
SGD 1.1 billion CDO assets in ROSA are rated AAA. We do not expect these assets to default.

We initially did not include ROSA as part of DBS' own exposure to CDOs on the assumption that ROSA would continue to be funded by investors. Following the market volatility in recent weeks, some ABCP conduits, including ROSA , have had to draw on liquidity facilities provided by banks. ROSA's total assets of SGD 1.4 billion can be fully funded by a liquidity facility provided by DBS Bank.

DBS' CDOs in ROSA are not directly exposed to the US sub-prime mortgage market. In addition, DBS does not have any other asset backed commercial paper conduit which invests in CDOs.

DBS Group Chief Financial Officer Jeanette Wong said: "DBS has one of the strongest capital positions of banks operating in Asia and we have minimal exposure to the US sub-prime mortgage market.”

Not all CDOs are exposed to the US sub-prime mortgage market. CDOs are debt obligations backed by assets. These assets can consist of bonds, loans and their derivatives and can include corporate loans, high-grade mortgages, sub-prime mortgages, car loans etc. Each CDO is different in terms of its percentage exposure to each of the different asset classes. Hence exposure to CDOs does not automatically equate with exposure to the US sub-prime mortgage market – it depends on what the CDO underlying assets are.

Ms Wong added: “Of our total SGD 2.4 billion holdings in CDOs, only 12% directly references some exposure to US sub-prime mortgages. We previously disclosed that this exposure is about USD 188 million (or SGD 288 million) and there has been no change to our US sub-prime mortgage exposure.

“We are comfortable with our present position and as always will monitor our risks closely. Our total CDO exposures make up only 1% of our overall assets with over 70% of this amount concentrated in the high quality AAA/AA+ space."

	CDO exposure as at 7 August		CDO exposure as at 27 August
	USD	SGD	USD	SGD
DBS Bank	850m	1.3bn	850m	1.3bn
Red Orchid Secured Assets ( ROSA )	0	0	0.7bn *	1.1bn *
DBS Bank's total exposure	850m	1.3bn	1.6bn	2.4bn
Third-party product sales, of which:	1.7bn	2.6bn	1.0bn	1.5bn
– ROSA	0.7bn ^	1.1bn ^	0	0
– Others	1.0bn	1.5bn	1.0bn	1.5bn
DBS Asset Management (as collateral manager)	1.0bn	1.5bn	1.0bn	1.5bn

DBS Bank's total exposure to US sub-prime mortgage CDOs

188 m

288 m

188 m

288 m

* Assuming conservatively 100% liquidity funding by DBS Bank
^ Assuming 100% commercial paper funding by investors