Current Affairs
Singapore banks creaking under relief measures and global lockdowns
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The concurrence of recent relief measures and unprecedented lockdowns worldwide and regionally have led to uncertain times for Singapore banks as their credit and income provisions take a toll in 2020.
The questions arose again for consideration as the Monetary Authority of Singapore (MAS) proposed measures on Tuesday (1 April) regarding how financial institutions should let distressed SMEs and property owners defer the principal repayments of secured corporate loans and qualifying mortgages until the end of this year.
According to The Business Times (BT), deferred loan payments are not classified as bad debt. This is because, the creditworthiness of customers facing temporary difficulties amid the “event risk” of COVID-19 is circumstantial. This classification is important because banks are expected to mitigate against bad debt while also deducting provisioning from earnings.
BT and UOB Chief Risk Officer Chan Kok Seong remarked after reading a note by Morgan Stanley on Wednesday (1 April) that banks in the country focus on assessing the lifetime impairment of credits: “Credits that are temporarily affected by Covid-19 are unlikely to move between stages, and risk-weighted asset migration will depend upon whether or not weaker credit is viewed as temporary.”
Linus Goh, who is OCBC’s Head of Global Commercial Banking, spoke to BT that loans with repayments that have been deferred will not be downgraded by the bank.
Mr Goh added: “The clients who are offered this are the ones who don’t have a pre-existing weakness. Therefore, the understanding is that this is an event risk thrust upon all of us.”
Singapore banks that adhere to more complex accounting standards, will experience their “first real test” on how to make forward-looking provisions to prepare for a broad macro slowdown as well as for large corporates which are the indirect target of these financial support measures may have experienced financial distress.
In the beginning of 2018, the IFRS 9 accounting standard was introduced which banks now adopt to assess expected credit loss. With the new standard, portfolio performance must be assessed by accounting for economic cycle prediction.
Accounting for the support package alone through forecasting for banks is proving to be difficult, as mentioned by Krishna Guha, an analyst of Jefferies Research.
Based on the consumer lending book, Mr Guha added that the worst-case scenario will see Singapore banks losing 14 to 18 per cent of revenue this year amid the recent pandemic relief measures for consumers.
He opined that revenue loss would be 14 to 16 per cent for OCBC and DBS as a worst-case scenario, provided that the bank’s entire mortgage and personal loan book is available for interest deferments or cheaper rates. As for UOB, revenue loss would be 18 per cent because the bank has the largest on-and-off balance sheet exposure for small firms at S$34 billion, compared to OCBC and DBS.
The adoption of the bank’s existing debt relief measures is now in the “low single digits”, Mr Chan explained. With MAS’ moratorium guidelines in place, he expects a single-digit percentage of property owners and as much as 20 per cent of SMEs to take advantage of the guidelines.
Speaking to BT, the UOB Head of Group Commercial Banking, Eric Tham remarked that “a significant number” of SME customers would likely take advantage of these relief measures to meet their “acute needs” right now.
More SMEs from many sectors will be applying for the relief, Mr Goh said. So far, enhanced working capital loans and temporary bridging loans offered with Enterprise Singapore make up most of the relief requests by SMEs. The government shoulders a large portion of the risk of these loans. With the loans, repayment will be extended over five years so that cash flow strain can be minimized as recovery happens, he added.
Moratoriums for principal repayments on secured and unsecured loans form the remaining relief requests. From latest check with more than 6,500 of its SME clients, almost a third are looking forward to benefit from the relief, Mr Goh elaborated.
There has also been a “healthy” adoption of its extension of import facilities of up to 60 days and its SME property loan moratorium, according to a DBS spokesman who told BT.
A persistent pandemic situation could cause higher provisions in the medium-run, considering the escalating asset quality pressures fuelled by the extent of social distancing, border closures and lockdown measures, CGS-CIMB analysts Lim Siew Khee and Andrea Choong opined.
Besides Singapore, key markets such as Indonesia have announced a state of emergency over the pandemic whereas Malaysia has implemented lockdown.
Last month, relief measures in Malaysia including moratoriums have been extended by UOB and OCBC to their retail and corporate customers.
According to Malaysian central bank last week, Bank Negara Malaysia, unless customers do not qualify or opt out, banks operating in Malaysia must allow an automatic extension of credit facilities for SMEs from now until 30 September 2020.
In 2019, Malaysia formed around 11 per cent of UOB’s overall pre-tax profits and approximately 14 per cent of OCBC’s core pre-tax profit. Another key market for the banks is Indonesia.
The credit costs across the lenders have been estimated at 60 basis points (bps) by CGS-CIMB. Credit costs of 70 to 80 bps could crimp 2020 earnings per share (EPS) by 27 to 42 per cent on a year-on-year basis, as opposed to the current estimate of 22 to 31 per cent decline in EPS.
On Wednesday (1 April) all three banks closed lower with UOB shares S$0.36 lower at S$19.09, OCBC shares S$0.15 lower at S$8.49 and DBS shares S$0.42 lower at S$18.15.
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Current Affairs
Man arrested for alleged housebreaking and theft of mobile phones in Yishun
A 23-year-old man was arrested for allegedly breaking into a Yishun Ring Road rental flat and stealing eight mobile phones worth S$3,400 from five tenants. The Singapore Police responded swiftly on 1 September, identifying and apprehending the suspect on the same day. The man has been charged with housebreaking, which carries a potential 10-year jail term.
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SINGAPORE: A 23-year-old man has been arrested for allegedly breaking into a rental flat along Yishun Ring Road and stealing eight mobile phones from five tenants.
The incident occurred in the early hours on Sunday (1 September), according to a statement from the Singapore Police Force.
The authorities reported that they received a call for assistance at around 5 a.m. on that day.
Officers from the Woodlands Police Division quickly responded and, through ground enquiries and police camera footage, were able to identify and apprehend the suspect on the same day.
The stolen mobile phones, with an estimated total value of approximately S$3,400, were recovered hidden under a nearby bin.
The suspect was charged in court on Monday with housebreaking with the intent to commit theft.
If convicted, he could face a jail term of up to 10 years and a fine.
In light of this incident, the police have advised property owners to take precautions to prevent similar crimes.
They recommend securing all doors, windows, and other openings with good quality grilles and padlocks when leaving premises unattended, even for short periods.
The installation of burglar alarms, motion sensor lights, and CCTV cameras to cover access points is also advised. Additionally, residents are urged to avoid keeping large sums of cash and valuables in their homes.
The investigation is ongoing.
Last month, police disclosed that a recent uptick in housebreaking incidents in private residential estates across Singapore has been traced to foreign syndicates, primarily involving Chinese nationals.
Preliminary investigations indicate that these syndicates operate in small groups, targeting homes by scaling perimeter walls or fences.
The suspects are believed to be transient travelers who enter Singapore on Social Visit Passes, typically just a day or two before committing the crimes.
Before this recent surge in break-ins, housebreaking cases were on the decline, with 59 reported in the first half of this year compared to 70 during the same period last year.
However, between 1 June and 4 August 2024, there were 10 reported housebreaking incidents, predominantly in private estates around the Rail Corridor and Bukit Timah Road.
The SPF has intensified efforts to engage residents near high-risk areas by distributing crime prevention advisories, erecting alert signs, and training them to patrol their neighborhoods, leading to an increase in reports of suspicious activity.
Current Affairs
Consumers Association of Singapore fined S$20,000 for PDPA breaches following two data security incidents
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The Consumers Association of Singapore (CASE) has been fined S$20,000 by the Personal Data Protection Commission (PDPC) for breaches under the Personal Data Protection Act (PDPA).
According to a judgement which was published on 28 August, the fine was imposed due to the consumer watchdog’s failure to implement reasonable security measures to protect the personal data in its possession and to establish necessary policies and practices required under the PDPA.
The breaches resulted in two significant incidents, one in October 2022 and another in June 2023, where the personal data of up to 34,760 individuals was potentially compromised.
Both incidents were handled under the Expedited Decision Procedure (EDP) at the request of CASE, with the organization admitting to all the facts and contraventions of the PDPA, leading to a faster resolution of the case.
The First Incident: Phishing Attack in October 2022
The first incident occurred in October 2022 when a threat actor accessed CASE’s email accounts and sent phishing emails from its official email addresses.
On 8 October 2022, some consumers received unsolicited emails from “[email protected],” which falsely claimed that their complaints had been escalated to the “collections and compensation department” and that they were eligible for compensation.
The recipients were asked to provide their banking details by clicking on a chat icon.
The following day, similar phishing emails were sent from “[email protected],” an account used for complaints that had progressed to mediation. CASE later discovered that the phishing emails had affected up to 22,542 email addresses.
Further investigations revealed that the phishing emails likely resulted from the threat actor obtaining login credentials from a CASE employee via a phishing attack.
The compromised accounts led to the sending of 5,205 phishing emails to 4,945 recipients. Although CASE acted swiftly to suspend the affected accounts and reset all administrator passwords, three consumers reported that they had clicked on the phishing links and collectively lost S$217,900. CASE subsequently lodged a police report.
The Second Incident: Data Breach During Vendor Migration
While PDPC was investigating the first incident, a second breach came to light in June 2023. On 22 June 2023, PDPC received a complaint about a phishing email that replicated a consumer’s complaint previously submitted to CASE.
This led to the discovery that the personal data of 12,218 individuals, including names, email addresses, contact numbers, and complaint details, had been exposed. The PDPC concluded that the breach likely occurred during a data migration exercise conducted by CASE between December 2019 and January 2020 when CASE switched vendors.
Investigations revealed that CASE’s contract with one of its vendors, Total eBiz Solutions Pte Ltd (TES), did not stipulate clear security responsibilities. This lack of contractual clarity contributed to the data breach during the migration process, highlighting CASE’s negligent vendor management.
PDPC Findings and Penalties
The PDPC found that CASE had failed to enforce its password management policy, with some passwords not meeting minimum length and complexity requirements and others remaining unchanged for up to four years. Furthermore, CASE’s vendor management was deemed negligent, as one of its contracts did not specify clear security responsibilities, putting personal data at risk.
CASE admitted to not conducting regular security awareness training for its staff, with the last session held five years before the first incident.
The PDPC also noted that CASE lacked an Information and Communications Technology (ICT) policy, particularly in relation to patching and maintaining IT systems. The absence of a documented IT infrastructure management plan, insufficient logging and monitoring practices, and the lack of security reviews over the three years preceding the first breach were significant failures highlighted in the judgment.
In assessing the financial penalty, the PDPC considered the nature and gravity of the breaches, the duration of non-compliance, and CASE’s annual turnover. The fine of $20,000 was determined to be appropriate in light of these factors.
Remedial Actions by CASE
It is said that CASE, which is headed by Mr Melvin Yong, People’s Action Party Member of Parliament for Radin Mas, has implemented several measures to enhance its cybersecurity in response to the breaches.
These include introducing multi-factor authentication for all web-based applications, strengthening password complexity requirements, decommissioning end-of-life devices, and implementing patch management software for security updates.
CASE has also revised its contracts with outsourced vendors to include data protection clauses and mandated annual data protection training for all staff members.
CASE is working towards obtaining the Cyber Essentials Mark and the Data Protection Trust Mark to reinforce its commitment to safeguarding personal data and complying with PDPA obligations.
The PDPC has directed CASE to review and update its data protection policies, rectify all identified security gaps, and report back within one week of completion. The organization has also been instructed to conduct a penetration test after addressing the vulnerabilities to ensure no further security gaps exist.
The post Consumers Association of Singapore fined S$20,000 for PDPA breaches following two data security incidents appeared first on Gutzy Asia.
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