DBS Sees Recovering Half of S$700 Million Exposed to Swiber

  • Exposures include loans, bonds and off-balance sheet items
  • Bank to make net allowance charge of about S$150 million

DBS Group Holdings Ltd., Southeast Asia’s biggest lender, said it expects to recover half of its exposure to Swiber Holdings Ltd., a Singapore-listed offshore oil and gas services group that filed for liquidation on July 27.

“DBS has a total exposure of about S$700 million ($518 million) to the Swiber group of companies, comprising loans, bonds and off-balance sheet items,” it said in a filing to the stock exchange Thursday. “As the exposure is partially secured, DBS expects to recover half of it and will provide fully for the anticipated shortfall.”

The disclosure by DBS is the first clear sign of deterioration in Singapore’s banking industry as local companies that rely on contracts within the offshore oil and gas market reel from a collapse in oil prices. Last year, a measure of the country’s bad-loan ratio reached the highest level since 2009, according to the Monetary Authority of Singapore.

DBS said it will tap its surplus general allowances, and that the net allowance charge will be lower at about S$150 million, according to the filing. The bank’s balance sheet remains strong and there is “minimal impact” on its capital adequacy ratio, it said. DBS is one of 10 principal bankers to Swiber, according to the latter’s 2015 annual report.

Swiber on Wednesday filed a petition to wind up and liquidate itself after facing $25.9 million of demands from creditors. A Singapore court will hear its application on Aug. 19, it said in filings. Singapore Exchange Ltd. said Thursday it will be undertaking a “thorough investigation” into developments at Swiber.

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