DBS 01 (May 08 - Jul 10)

[kennynah]

good one rontan

The glitch makes DBS a Damn Bloody Slow bank!

[millionairemind]

Published July 9, 2010

Did a mainframe glitch trigger DBS outage?

Mainframes continue to anchor bank systems, but why didn't redundancy measures kick in?

By WINSTON CHAI

(SINGAPORE) A malfunction at the very heart of the bank's technology infrastructure may have triggered the unprecedented systems failure that DBS Bank suffered early this week, sorces said.

BT understands the bank appears to have been hit by a mainframe glitch on Monday morning and this could have sparked the seven-hour hit to the bank's online banking, automated teller, credit card and Nets payment services. When contacted, a DBS spokeswoman said the bank will 'provide an explanation for the incident soon' as it is waiting for the interim investigation report to be completed.

Its technology services provider IBM would only say that it is still working with the bank on a 'full-scale investigation'. The firm had earlier attributed the breakdown to a 'systems outage' but did not specify which systems had failed.

Mainframes, sometimes referred to as big irons, are the most powerful computers that are found in large corporations.

These bulky machines, which could cost millions of dollars, typically handle critical business applications and storage, as well as heavy-duty number crunching. Common tasks that are taken on by a mainframe include processing financial transactions for banks, or churning out a large company's payroll.

With these machines having been around for over two decades, their demand has fallen in recent years as technology advancements now allow a number of mainframe applications to be offloaded to smaller computers with more powerful chips.

In 2002, DBS outsourced its network and mainframe functions to IBM under a $1.2 billion deal. As the pioneer of mainframe technologies, IBM is still the dominant player in this field, commanding a worldwide market share of over 90 per cent. All 50 of the world's top banks use IBM mainframes to process their transactions. The list includes financial giants like the Royal Bank of Scotland, Deutsche Bank, BNP Paribas, Barclays Bank and HSBC. Besides DBS, IBM's other mainframe customers in the region include Bank of China and the Korea Exchange Bank.

'Mainframes are still very much in use and continue to be a very significant part of the IT infrastructure. This is particularly true in industries such as banking and finance, local and federal government, and even manufacturing,' said John Brand, a vice-president with analyst firm Springboard Research.

Given their importance, mainframe computers are typically well protected against unexpected outages. Common measures include installing surge protectors to shield against voltage spikes and back-up power supplies in the event of electricity failure.

In addition, most companies also factor in so-called redundancy features to spread the workload to other machines in case one fails. Some service providers even offer off-site redundancy where they run their clients' applications on their own systems during a breakdown.

'While every organisation has an ever increasing number of business-critical applications that must achieve at least 99.999 per cent uptime, it's the 0.001 per cent of downtime that people are still focused on. The financial and reputational implication of that very small fraction of a number is often worth many million or billions of dollars,' Mr Brand highlighted.

According to DBS, it first discovered the systems glitch at 3am on Monday. Services were partially restored by 10am and the others by lunchtime. The protracted delay has raised questions as to why its system redundancy measures failed to mitigate the disruption.

The Monetary Authority of Singapore (MAS) requires banks to observe a set of 'business continuity management (BCM) guidelines' to ensure that they remain operational in the event of a disaster or other emergencies.

Measures suggested by the regulator include formulating a business continuity plan (BCP) and conducting regular tests to familiarise staff with the procedures for emergency response.

'BCM remains an important contributing factor in MAS's overall supervisory assessment. MAS will, in the course of its supervision of institutions, review the BCP implemented, taking into consideration the extent to which the institution observed the guidelines, and its risk profile,' its guidelines say.

[profittaker]

Banks needs to refinance their debts, and governments also cannot defaults, can they able to pull it through?

The numbers in below article seems related to Basel III.

btw... Robert Prechter also talked about optimism would end in 2012, is he speculating based on these debt numbers?

Crisis Awaits World’s Banks as Trillions Come Due
Published: July 11, 2010
Banks worldwide owe nearly $5 trillion to bondholders and other creditors that will come due through 2012, according to estimates by the Bank for International Settlements. About $2.6 trillion of the liabilities are in Europe.

U.S. banks must refinance about $1.3 trillion through 2012. While that sum is nothing to scoff at, analysts seem most concerned about Europe because the banking system there is already weighed down by the sovereign debt crisis.

Hi MM , u're right abt Basel III. G20 at Toronto has taken the position that 2012 will be the beginning and not the completion of the implementation of Basel III requirements. That means G20 thinks the world economy is still feeble and they need to ease credit conditions.

[winston]

Not vested.

Singapore's DBS opens 1.4 pct higher after Q2 loss

SINGAPORE, July 30 (Reuters) - Singapore's DBS Group , Southeast Asia's biggest bank, opened 1.4 percent higher on Friday after it reported a surprise second quarter loss because of a goodwill charge for its Hong Kong business.

Trade was choppy in the opening minutes but by 0113 GMT, it was around 0.69 percent up at S$14.60, with over 7 million changing hands.

DBS said earlier it had a net loss of S$300 million ($220.3 million) in April-June, compared with a net profit of S$552 million a year ago. The bank took a S$1.02 billion goodwill charge on its Hong Kong business.


Source: Reuters

[winston]

Supposedly future growth to compensate for high valuation with no margin of safety ?


Not vested. From Lim & Tan:-


The purchase of DBS HK (former Dao Heng Bank) almost 10 years ago has come back to haunt: after the $1.1 bln write-off in early 2006 for financial year 2005, the Bank is providing a $1.18 bln writeoff, to bring the book value of DBS HK to S$8.4 bln, albeit still a high 2.2x book.

[LenaHuat]

DBS was taken silly by what I would call the "HK triumvirate" of well U know.... These 3 American Chinese (originally from HK) so charmed Dhanabalan. The sick part was that they were so richly rewarded for this terrible mistake. I recalled visiting HK soon after the takeover and had difficulty locating a DaoHeng branch in Central.

[winston]

Whenever there's a Buyer and the Seller is QLC, I will bet on QLC anytime