Shareholders tell DBS board: Higher rates for POSB savers
A CALL to give POSB customers a better deal - in particular, higher interest rates for their savings - dominated proceedings at DBS Group Holdings shareholders' meeting yesterday.
Mano Sabnani got the ball rolling by citing DBS chief executive Piyush Gupta's comments in the bank's annual report last year on the bank's "social responsibility" - that the bank had to go beyond creating shareholder value to providing shared value for the communities within which it operated.
Mr Sabnani, noting that POSB used to pay higher interest rates than other banks, said POSB savings now earn just 0.05 per cent interest; only sums above $1 million get 0.10 per cent.
POSB customers were "the mums and pops", HDB heartlanders with little financial knowledge about investing their savings, he warned, adding: "You could lose the loyalty of POSB customers if you continue to pay low rates."
Another shareholder asked that POSB pioneer customers or retirees be offered extra interest, like that given by some foreign banks.
"Half a per cent more or 0.25 per cent more won't make the bank poorer," he said, referring to longstanding customers who were banking with POSB long before DBS came into the picture.
POSB, regarded as the People's Bank, has served generations of Singaporeans since 1877; it was taken over by DBS in 1998.
Another shareholder asked whether the long queues in POSB branches could be reduced.
Mr Gupta, responding, said the reality was that interest rates were very low and that the bank "actually absorbs some of the interest reductions", which is why DBS' return on equity was 10 to 12 per cent, when it could be between 12 and 13 per cent.
He pointed out that the bank did have products to reward customer loyalty, and paid "enormous" attention to POSB customers, including working at cutting the queue times.
The queue time during peak hours is now 40 minutes, down from two hours three years ago; 80 per cent of queue time is about 15 minutes, he said.
DBS has also put more employees on duty in POSB branches, and launched an application so customers can check the queues at the respective branches before showing up.
To another question, Mr Gupta said DBS will not retire the 2010 $800 million 4.7 per cent callable 2020 retail preference share tranche, which has been hit by Basel III rules. The institutional tranche was retired last month.
Under Basel III, the bank's preference shares issued before Jan 1 last year no longer fully qualify as Tier-1 capital.
The bank decided to retire only the institutional tranche but not the retail one because that would affect "too many mums and pops", said Mr Gupta.
THE BUSINESS TIMES