S&P: DBS Bank unaffected

Standard & Poor's said that there would be no impact on the ratings on Singapore's DBS Bank Ltd. (A+/positive/A-1) following its announcement of a planned 37.5% investment in an Indian nonbank finance company Cholamandalam Investment and Finance Co. Ltd. (CIFCL).

The investment, which is still subject to regulatory and shareholder approvals, is expected to cost the bank Indian rupee 2,280 million and be funded by internal resources. This investment represents about 0.8% of DBS's adjusted common equity and 0.05% of assets as at March 2005.

S&P said that although profit contribution from this strategic investment will not be material in the near term, it will nevertheless give DBS Bank access into the growing mass consumer finance market in India. In addition, DBS Bank also hopes to combine its financial expertise with CIFCL's to grow the company's other business areas in securities broking, asset management, and distribution of investment products and risk management.

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