Click here to go back to the DBS Bank home page

DBS Bank Annual Report 1998

Performance at a Glance

Financial Highlights

Letter to Shareholders

Corporate Governance

Operations Review

Financial Report



Operations Review

Regional Development - Thai Danu Bank

Efforts are under way to closely align 
the operations of Thai Danu with those 
of DBS.

The economic crisis continued to have a negative impact on all Thai banks. Thai Danu Bank (TDB) reported a loss of Bt9,126 million for the year, due to increased provisions of Bt7,021 million for non-performing loans (NPLs), which at the end of 1998 represented 52.7 percent of its total loans, as well as write down of its investments amounting to Bt1,667 million. The specific provisions in TDB's books were made in accordance with Bank of Thailand's (BOT's) new guidelines which phase in provisions in five semi-annual periods up to Year 2000.

However, an extensive review of TDB's asset quality was undertaken in conjunction with DBS Group's external auditors, Price Waterhouse, as conditions in Thailand continued to deteriorate. And, DBS Group accounts for 1998 provided for all the specific provisions required, amounting to Bt25 billion, on the NPLs in accordance with Singapore provisioning standards which require immediate recognition.

Thai Danu Bank
DBS Bank Philippines
PT Bank DBS Buana
Map of Regional Development

Building a world-class bank
Individual and Enterprise Banking

Institutional Banking, Treasury and Capital Markets

Regional Development


Supporting the community

In February 1999, TDB and DBS announced a capital raising exercise which is expected to raise between Bt12 billion and Bt17 billion to allow TDB to meet BOT's provisioning guidelines ahead of Year 2000 as well as for future expansion of business. This exercise consists of a rights issue of shares, an issue of Capital Augmented Preferred Shares (CAPS) to be placed in Thailand, and CAPS with a convertible feature to be placed with DBS. TDB's total capital adequacy ratio is expected to increase to at least 17.45 percent as a result.

To counter the increase in NPLs, credit controls have been centralised and internal processes revised in line with international standards. Credit officers have been retrained and a 'hospital bank' formed to provide financial restructuring for customers with viable businesses who face temporary problems. Experienced staff have been recruited to assist in the NPL resolution process. In addition, a Problem Loan Committee has been formed to review existing and potential NPLs, provide restructuring guidelines and decide on the ultimate course of action. Given the measures taken by TDB, the Thai Government and BOT, NPLs are expected to be contained in 1999 and diminish thereafter.

Efforts have been under way to more meaningfully align the operations of TDB with those of DBS to leverage best practices and facilitate coordination of business policies, customer initiatives and support services. Working with external management consultants, a new organisation structure was announced which more closely aligns TDB with its customer base. The end result is expected to be a bank that is better positioned for the Thai financial services market and better able to address the unique needs of its customer segments, once the crisis has passed.