Wednesday, November 12, 2008

An Open Letter to Mr Koh Boon Hwee (Chairman, DBS)

This is a contribution from betsybug:

Dear Mr Koh

I refer to your recent interview with the Straits Times published in that paper on 12 Nov 2008.

"I believe that we will do things differently"
DBS will earn the thanks of your future customers, at least those intrepid ones who dare risk their funds in releasing them into the tender care of your bank.

But this is small comfort to the affected High Notes customers who have been forced to literally pay the price of DBS's lackadaisical ways of selling products in the recent past. We are the ones to whom the bank has pushed the burden of proof of its own misdeeds.

You want now to build a better structure to protect the bank from future accusations of mis-selling and misrepresentations. That is good. But DBS should never have betrayed the trust of its customers who looked to it for a safe haven for their money in the first place. That would have been better.

So the question to DBS is: you made a mistake; people have complained; you have now learned a painful lesson; but why are those who brought this lesson to you the ones to pay the entire price?

"The financial landscape has changed"
Of course it has. But the mark of a person or an organisation is not evidenced by what happens in the better times, but by what happens in the dark ones as well. By all its recent actions, DBS has proved itself to be a fair weather friend, ready with false assurances and a glib tongue, and take our money on a sunny day, but run to the shelter of legal clauses when the storm breaks.

The issue with High Notes is not that Lehman Bros. has collapsed; rather it is about what customers have been told by your representatives when they were selling these products. So, even if it was just one week after the sale, and Lehman is still the darling of Wall Street, we will still have a problem with the unrevealed risks that were never properly explained. Lehman is only the instrument with which this can of worms was opened to public view, and the sight we gained of the product and the inner workings of DBS is not a credit to your bank.

The question to DBS is: when will DBS finally take responsibility for its actions instead of sweeping it under the convenient Lehman rug?

"preface every investment...with a summary sheet"
May we hope that the future summary sheet includes all the facts pertinent to making an informed decision, and not just the positive points as we have seen in various "fact sheets" DBS has put out on High Notes to bait the unsuspecting customer?

I'd like to ask: when will DBS learn from the medical profession, and that is, in treating the financial health of its customers as of the utmost importance, and to give proper advice so that its customers have all relevant information, and not look on customers as just a contributor to the quarterly reporting?

"OCBC and UOB sold preferential shares to investors"
Really, making this argument must surely be beneath DBS. Unlike those preferential shares, DBS's High Notes 5 is now worthless (at least according to DBS). Unlike High Notes whose complexity is beyond even the Relationship Managers to comprehend, those shares are easily understood financial instruments. And unlike High Notes, those preferential shares were not misrepresented.

If High Notes customers had DBS preferential shares instead, we would like to assure you that we will not hold DBS responsible for any losses. But we hadn't, and therefore we will.

A question: will DBS never own up that it has simply sold High Notes to the wrong set of people, never mind who has read what, what is written where, and who has told whom what and when?

"We don't like the fact that people have lost money"
Guess what? We don't either. Especially when the basis of calculating that loss to be a complete one is based on a choice of formulae that needs to be questioned. And questioned closely.

"I'm extremely proud of the people in DBS"
These are fighting words and they will probably cheer the collective hearts of your shareholders in a gloomy time, but do not be surprised that they bring little comfort to your customers, especially those ones to whom you have sold those unfortunate High Notes, and the 900 employees you will be retrenching.

Nowhere in the interview do we read of your sympathy for your High Notes customers, many of whom have been with you for twenty, thirty years, and who because they never thought the "national bank" would play them false, put money in on the strength of that relationship.

Question: can this be any firm foundation to rebuild people's trust in DBS as you say you want to do?

"I can tell you they've taken some abuse"
This is unfortunate. I recall that Mr Rajan Raju appealed for civility during the dialogue sessions. But please understand that when people put money that they have spent long years accumulating, when those funds are their plans for their children, their dreams for their own futures, when those savings may be someone's hopes for a better life, and when they take that money and entrust them to your bank on some given understanding that it will be safe, and when that trust is proved misplaced, and that understanding is turned upon its very head, then please forgive them for being just a little upset.

People in Singapore are very tolerant by nature and are slow to to be riled. But, sir, DBS has played fast and loose with people's lives and they are the ones who have taken much abuse. Do you wonder then at their reactions?

"Many questions are sent heaven-wards, but no answers have yet descended"



Anonymous said...

Well done Betsybug!, suggest you send this to the media, especially Today!

Anonymous said...

This comments is for Strais Time. As much as you have given publicity to Chairman DBS's interview why not publish this open letter. Show your impartiality. Let the public be the judge.Let Singaporeans see the how investors have suffered "with their eyes opened".

LSK said...

UOB and OCBC preference share prices fluctuate with the stock market. But the dividend is fixed.

I do not understand why he compared these preference shares to HN5. Is he desperate to divert attention?

Prefernce shares only go to zero if UOB and OCBC fold. If any of the banks fold, I doubt DBS can insulate itself from the event.

Richard Sim said...

Aiyah, even the government has made a statement that investors should take responsibility for their own decisions. Gone case already.

Go to court so what? All the judges will take the view of the government also mah. They are paid as civil servants.

Time to give up..

Anonymous said...

from today, I will not buy US make products...the original of TOXIC CDOs...
It is where these all started...It is like tainted Milk case from China.
Now they got NOthing to said except Haiti School Collapsed.
WTF, US's media...

Anonymous said...

This Koh Boon Hwee is one lucky guy. He seems to have a very good reputation and heads many great companies. Many years ago I bought Internet Technology Group shares at 42 cents after seeing him as a memebr of the board of directors. Guess what, he resigned soon after but I did not know. By the time I knew, ITG has dropped till 3 cents. I wonder whether he will be leaving DBS soon.

Anonymous said...

if words can win back money

I would have been the States Spokesperson by now.

Anonymous said...

It is my view that Mr Koh, Mr Goh, The MM and co. are just doing their jobs to protect DBS. What do we mere mortals know about how much losses DBS itself suffered, how Temasek suffered, etc in the current crisis? Only the top people know and the results could be so bleak and unthinkabale, if they don't prop up DBS the entire structure will collapse and there will be no more creditability on Singapore government and utter financial chaos will happen. Sad to say, I trust MR Goh, Mr Koh, the MM and MAS as much as I dislike and can't stand their arrogance.

Zhi Yuan said...

Hi there,

Watch this video dedicated to all minibond investors:

I hope you get the gist of it.

A government which does not help those voted for them will not deserve their vote the next round.

Let us OPEN OUR EYES too.

Anonymous said...

Betsybug, an excellent letter. It is a reflection of the dishonesty of some people, people who think of themselves as the guardians of their organizations but who have no clue as to what is right or wrong, rational or irrational. These people need to look up the dictionary to see what the term "dishonest" means.

VS Lingam said...


I think Koh Boon Hwee brought up the Preference Shares issue because DBS had issued such shares some years ago. He now claims that OCBC and UOB did not support the idea at that time, but now have issued such shares. That is, OCBC and UOB have copied DBS.


KT said...

Hi Richard and all HNs Investors,

Far from giving up!

Yes, we heard from Mr Goh Chiok Tong that retirees would be better off leaving their monies with CPF to enjoy 4% p.a. than to experience the existence of capitalisation.

Yes, we heard from Mr Lee Hsien Loong that we want to be careful not to shake our financial standing.

Now, we heard from our most respected MM Lee that young and educated investors ought to take responsibility since we went into these arsenic products with open eyes.

Please excuse them. Isn't it obviously that they are just as misinformed as we were when we decided to place our monies and our trust in the HNs? When FIs that erred chose to cover their misdeeds and created perceptions contrary to the truth, it will require extraordinary wisdom on the part of our wise and well respected leaders to discern the truth and render us justice.


Anonymous said...

The present debacle highlights the need for consistent TRANSPARENCY/ACCOUNTABILITY and CHECKS/BALANCES. We cannot wait until a crisis happens.

There are so many instances of Conflict of Interest in Singapore. The government MUST stop pretending that they aren't there and when exposed, it MUST stop pretending that it can remain NEUTRAL.

It is abundantly clear which side the PM, SM, MM, MAS, DBS is on. Thank goodness for TKL, Betsy and others and for Hong Kong. Otherwise the issue will buried.

Please remember that should DBS be in trouble, it is not because of the complaints. It is because of its own mis-direction and mismanagement. So deal with it!

Anonymous said...

Thanks nice blog.

Jacky said...

Bravo letter! You should send to tat newspaper.

Anonymous said...

As far back as 1996, I had stopped trusting the Deadly Beastly Schemer when IT started charging $2 for saving accounts that has less than $500 in them.

During that time, my children were innocent victims of that blood-sucker that slowly but surely sucked away all their savings by deducting $2 every month, until their accounts were dry and in deficit instead of savings.

As far as I am concerned, the Deadly Beastly Schemer is finished. Once bitten, twice shy. I will never trust that Beast again!

Anonymous said...

The next election make sure you walk into the polling station with both eyes big open ! You tell him that after you vote. What nonsense, and sadly all my prior respects down into the drain.

Anonymous said...

When I went in with my eyes opened
I was greeted with painted picture
of good returns and wonderful years ahead

Now that i had my eyes closed
I can’t vanquish the evil faces
of man-made monster and pitiless world around

I hear taunts that accuses :
But there is only silence to :

Why my friend, do you not see!
In time like this,
It is better to be borned blind
Than not to “see” at all!