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Bonuses Paid to Singapore Banks for Selling Risky Debt Under Scrutiny

  • Rebates of as much as 1 percent offered for unrated bonds
  • Private Bank Code of Conduct being reviewed on disclosures
Photographer: Nicky Loh/Bloomberg

Singapore’s private banks are coming under scrutiny for earning bonuses by selling risky debt, as the city sees an unprecedented wave of defaults. The central bank says an industry group is reviewing the practice.

Bond issuers offer banks rebates of as much as 1 percent as incentive to sell unrated securities, according to a Bloomberg News analysis of figures from bond-sale arrangers and compiled by analysts. The payments, which often aren’t explained to the banks’ clients, have stoked concerns of a conflict of interest, and Fidelity International has called for the practice to be abolished. At least half the S$875 million ($650 million) of bonds that have failed since November were sold by private banks earning rebates.