SINGAPORE : DBS has again assured investors that it only has minimal exposure to the US sub-prime mortgage market. In a statement out on Monday, the bank confirmed that it had a total exposure of S$2.4 billion to collateralised debt obligations (CDOs).
This is S$1.1 billion more than S$1.3 billion exposure it had declared in early August.
DBS said the additional S$1.1 billion exposure came from CDOs held by an asset-backed commercial paper conduit called Red Orchid Secured Assets (ROSA).
It explained that this was not included earlier because it had assumed that the conduit would continue to be funded by investors.
But this assumption could not hold, given the recent market volatility.
Still, DBS said, ROSA's total assets of S$1.4 billion can be fully funded by a liquidity facility provided by DBS.
It stressed that the CDOs in ROSA are not directly exposed to the US sub-prime mortgage market.
DBS said that out of its total S$2.4 billion holdings in CDOs, only 12 percent directly references some exposure to US sub-prime mortgages.
Its total CDO exposure makes up only 1 percent of its overall assets.
CDOs are financial instruments that pool bonds, bank loans and credit derivatives into new high-yielding securities. - CNA/ch
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