S&P: Singapore banks credit profiles solid

Standard & Poor's said it believes that the three Singapore-headquartered banks could tolerate some easing in their capital ratios without diminishing their credit profile to an extent that credit ratings would be lowered. This is assuming present conditions prevail. The banks are DBS Bank Ltd., rated AA-/stable/A-1+, Oversea-Chinese Banking Corp. Ltd., rated A+/stable/A-1 and United Overseas Bank Ltd., rated A+/stable/A-1.

S&P said it also feels that the extent of any reduction is likely to be lower than the potential capital cushion that could be derived using the Basel-II internal ratings-based methodology.

By both the new and the previous Tier 1 regulatory capital hurdles, all three major Singapore banks are comfortably above the minimum regulatory requirements, the agency said.

However, Singapore's banking regulator, the Monetary Authority of Singapore, is likely to demand a higher capital requirement than may be implied by the application of internal ratings-based methodology, S&P added.

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