DBS’s private banking clients were told Swiber bonds were safe ’cause DBS was a big lender?
This wicked, evil tot crossed my mind when I was reminded that DBS
had a S$700 million ($522 million) exposure to the Swiber group of companies and expected to recover roughly half, given some was secured by assets. That amount represents 92 percent of Swiber’s $567 million in total equity at the end of the first quarter, the last time it reported its financial position. It also probably means that just over half of all the leases, borrowings and notes payable reported by Swiber were owed to DBS.
Any credit officer should balk at a lender being in charge of more than half the debt of an entire company. It gets worse, however, because on top of that, Swiber’s debt had already become much larger than its equity, a sign the bank should have considered scaling back its exposure.
I mean DBS wouldn’t lend money to any dog, let alone a dying dog with maggots festering in it, would it? And persuade its private banking clients snd accredited investors to join in, would it?