DBS Group Holdings share price in trouble

Troubles come in troops for DBS Group Holdings share price (SGX: D05). The recent online service outage caused an uproar in Singapore, with the Monetary Authority of Singapore (MAS) saying that the disruption was “unacceptable”. The MAS will also be taking actions against DBS after investigation is completed. In light of this mess, what will the implication be for DBS Group Holdings share price (SGX: D05) in the coming months?

For DBS Group Holdings, it is a case of lightning strikes thrice as the 29 March 2023 service outage was actually the third time for DBS. The previous incidents took place in November 2021 and July 2010. For the 2021 incident, the MAS has imposed an extra capital requirement of $930 million on DBS. This was four times higher than the amount imposed on the bank for the 2010 incident. Evidently, the extra capital requirements had not been effective as the latest outage took place just 16 months from the 2021 incident.

Will the MAS impose a significant civil penalty on DBS? It remains to be seen as analysts had claimed that the MAS is likely to impose another round of extra capital requirement on DBS, albeit at a much higher amount than the 2021 version. However, given that DBS has not learned the lesson from the previous outage saga, it may be possible that MAS may impose a heavy civil penalty to jolt DBS into taking effective remedies. In view of this, DBS Group Holdings share price could be bearish in the coming months.

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Already, DBS Group Holdings share price (SGX: D05) started to cave in after short selling volume surged to a high of 2.48 million shares on 30 March 2023. Typically, the short selling volume ranges from 300,000 to 500,000. The last time that short selling volume on DBS crossed the 1 million mark was on 15 February 2023. On that day, short selling against DBS reached 1.16 million following CEO Piyush Gupta’s revelation of DBS loan exposure of $1.3 billion to beleaguered Adani Group, which has been targeted by short seller Hindenburg Research. The Adani Group is alleged by Hindenburg Research for stock manipulation. Consequently, DBS Group Holdings share price fell from $36 on 10 February 2023 to $34.70 on 15 February 2023.

To complicate matters, the recent DBS outage took place at a time when investors are still in jitters over the bank runs in US. Three large US banks had failed – Silicon Valley Bank, Silvergate and Signature Bank. The collapses ignited global fear of contagion in the financial sector, leading to another massive financial crisis not seen since 2008. The forced merger of Credit Suisse and UBS and the panic selloff of Deutsche Bank also mean that all is not well at Europe too.Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in DBS Group Holdings share before. Whether DBS Group Holdings share price (SGX: 05) will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

DBS Group Holdings share price faces shockwaves in 2023?

In particular, the overnight disappearance of Silicon Valley Bank had not only sparked off a global shockwave, but also [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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