DBS Bank Successfully Completes Offering Of US$785 Million Equivalent In Hybrid Tier 1 Securities

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Enlarged Issue Enthusiastically Received in US, Europe, and Asia

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High Credit Standing Among Asian Banks Makes DBS Stand Out

SINGAPORE, MAR 15 - DBS Bank said today it has successfully completed a two-tranche offering of US$785 million equivalent of Tier I capital securities to investors in the US, Europe and Asia.

The offering, which is expected to close the week ending March 25, comprised a US dollar tranche of US$725 million, with a coupon rate of 7.657%, and a Singapore dollar tranche of S$100 million, with a coupon rate of 5.35%.

Demand for the issue was strong, and more than five times oversubscribed by investors. DBS had originally sought to raise US$500 million in the US dollar tranche, but high demand led the Singapore-based bank to enlarge the tranche to US$725 million.

Market observers said the issue had been aggressively priced, despite the recent market turmoil caused by the sell-off in international equity markets. A major factor driving demand for the DBS Bank securities was its Aa2 senior rating (Moody's), the highest among banks in Asia. Standard & Poor's rates DBS A+, and Fitch IBCA AA-.

To satisfy banking and tax regulations, the securities will be issued by a wholly owned, special-purpose finance subsidiary of DBS Bank. The special purpose subsidiary will lend the proceeds to DBS Bank in exchange for a DBS Bank subordinated note. The finance subsidiary will then use the payments it receives on the subordinated note to make payments on the securities.

DBS is the first bank in Singapore and Southeast Asia to issue these securities, as well as the first bank to issue Tier I securities in Singapore dollars.

Jackson Tai, President and Chief Operating Officer for of DBS Group Holdings, said the Bank was delighted with the response from investors.

"DBS' high credit standing was a significant factor in attracting investor demand. It clearly differentiated us, and allowed us to raise this new capital in a choppy market. We are, as well, pleased with the pricing, which compares quite favorably with other recent and similar issues by the US and European banks.

"These securities are an important capital management tool. Although they contain many features found in debt securities such as fixed coupons, redeemability, and synthetic maturities, while counting as Tier I capital, they also exhibit many capital-like features, such as subordination and non-cumulative interest payments.

"Importantly, the issue attracted leading fixed income investors in Europe, the US and Asia. Investor demand in the US and Europe was particularly strong, with an excess of US$1 billion of demand in these markets. This is beneficial for us, because it allows us to broaden our investor base in areas where there is a long-term investment environment as well as a liquid secondary market," Tai said.

The issue was part of DBS' overall capital management program aimed at lowering DBS' overall cost of capital and allowing it to move towards a more optimal capital structure. The after-tax cost of financing to DBS is expected to be about 6%.

Tier I securities have become a common form of financing and a valuable capital management tool for banks worldwide. In 1998, The Monetary Authority of Singapore (MAS) expanded the definition of Tier 1 capital, allowing banks to maintain up to 15% of their total Tier 1 capital in the form of innovative capital securities. DBS Bank is the first bank in Singapore to avail itself of the revised MAS guidelines with its issue.

The securities are perpetual securities, redeemable after 10 years at the option of DBS Bank. They are essentially the same as those issued in recent years by leading global banks in countries such as the US, UK, France, and the Netherlands.

In total, the worldwide market for Tier 1 capital securities is about US$100 billion. Last year alone, more than US$20 billion of Tier 1 capital securities were issued by almost 30 banks in 10 countries. These banks included HSBC, Standard Chartered, ING, BNP Paribas and ABN Amro.

Goldman Sachs (Singapore), Morgan Stanley Dean Witter and DBS Bank were the lead managers for the offering.

DBS Bank is the flagship bank of DBS Group Holdings in Singapore. It is ranked among the top banks in Asia, the 70th largest in the world, a recognised leader in Internet banking and e-commerce and the market leader in Singapore-dollar loans and deposits, and equity fund raising. Beyond Singapore, DBS Group serves corporate, institutional and retail customers through subsidiaries in Hong Kong, The Philippines, Indonesia and Thailand, and international banking services through a network of 13 overseas branches and offices.

This press release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer, which will contain detailed information about the company and management, as well as financial statements. "United States" means the United States of America, its territories and possessions, any State of the United States, and the District of Columbia.