Nov. 7 (Bloomberg) -- DBS Group Holdings Ltd. will cut jobs for the first time since 2001 after reporting its steepest profit decline in two years.

The Singapore-based bank, Southeast Asia's largest, will trim 900 jobs or 6 percent of its workforce. Chief Executive Officer Richard Stanley, who joined in May from Citigroup Inc., said the reductions affect all levels of the organization, with the bulk in Singapore and Hong Kong.

``We must run a tighter ship,'' Stanley told reporters in Singapore today. ``This is a painful decision for DBS and for me personally but it's something we have to do in a difficult environment.''

DBS is adding to the almost 150,000 financial-services positions lost worldwide since the credit crunch began, as the fallout begins to spread into Asia. Singapore's economy is in a recession and Las Vegas Sand Corp., which borrowed money from DBS for a casino in the city-state, said yesterday it may default unless it manages to raise more funds.

Shares in DBS rose 2.7 percent to close at S$11.40, erasing an earlier decline of as much as 8.8 percent.

``The exposure to Las Vegas Sands is not that substantial,'' said Daphne Roth, Singapore-based head of equity research at ABN Amro Private Bank, with about $30 billion of Asian assets. The portion of lending to Las Vegas Sands made up 0.5 percent of DBS's total loans, 0.9 percent at United Overseas Bank Ltd. and 0.6 percent at Oversea-Chinese Banking Corp., she said.

Adelson in Talks

Stanley, 48, said he doesn't expect Las Vegas Sands to default on a S$5 billion ($3.3 billion) loan DBS helped arrange with other lenders for the Singapore casino-resort.

Sheldon Adelson, the billionaire who controls Las Vegas Sands, held talks with the Singapore government this week as the company's struggle with a cash shortage threatens a $4 billion casino development in the city-state, a person with knowledge of the meetings said.

Las Vegas Sands is seeking funding to stave off defaulting on loans while facing ``substantial doubt'' about its ability to survive as a going concern, the casino owner said yesterday in a filing.

Investment Provisions

Stanley is firing workers to contend with the fallout from a slowing Singapore economy. The city-state, which entered a recession last quarter, faces ``further slippage'' as a global slowdown threatens manufacturing, consumer spending and tourism, its central bank said last week.

Today, DBS said net income fell 38 percent to S$379 million for the three months ended Sept. 30. That's the steepest decline among Singapore's three banks and is lower than the median estimate of S$455 million in a Bloomberg News survey of six analysts.

Provisions for investments including collateralized debt obligations rose 59 percent to S$448 million from three months earlier. Allowances for soured loans, plus investments in debt securities and CDOs not linked to asset-backed securities, more than tripled to S$319 million. Deteriorating credit quality complicates efforts by Stanley to expand in Asia.

`Challenging' Environment

``The operating environment is increasingly challenging for financial institutions the world over,'' Stanley said in the statement. ``We took upfront prudential levels of allowances to strengthen our balance sheet.''

The bank posted trading losses of S$13 million, the statement said. It also set aside S$70 million for compensation to some customers that had purchased structured products tied to failed Lehman Brothers Holdings Inc.

DBS held S$1.13 billion worth of CDOs, up from S$1.11 billion in the previous three months. That includes S$263 million linked to asset-backed securities.

United Overseas, the first of the three Singapore lenders to announce third-quarter results, said Oct. 31 profit fell 5.1 percent as impairment charges for loans and debt securities surged. The lender's allowance for CDOs rose 27 percent to S$199 million from the previous three months.

Worst Performer

Oversea-Chinese said Nov. 5 profit fell for a fourth straight quarter as it increased provisions for soured loans and for assets including CDOs fourfold to S$156 million.

Trevor Kalcic, a Singapore-based analyst at Royal Bank of Scotland Group Plc, said taking extra provisions was a ``good idea,'' as DBS could then ``enter 2009 with a cleaner slate'' as it grapples with other challenges.

DBS now trades at 0.8 times its book value, compared with 0.4 during the Asian financial crisis, ABN Amro's Roth said. ``Certainly, I do not think that we are in the same situation,'' she said.

DBS is the worst-performing banking stock in Singapore, having lost 45 percent this year, compared with 34 percent for United Overseas and 37 percent for Oversea-Chinese Banking.

The impact of the credit crunch will be ``increasingly evident in the real economy,'' Wee Ee Cheong, chief executive officer of United Overseas, said last week. David Conner, CEO of Oversea-Chinese, said this week that the next few quarters will be ``challenging.''

To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net; Jean Chua in Singapore at jchua4@bloomberg.net

Last Updated: November 7, 2008 04:24 EST