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Corporate Governance Report |
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INTRODUCTION
DBS considers good corporate governance to be the cornerstone of a well-managed organisation. Good corporate governance goes beyond the output of transparent, timely and full financial disclosures to a gamut of decisions and structures manifested by board composition, decision-making powers, internal governance to instilling the right corporate culture across the organisation. DBS aspires to the highest standards of corporate governance, starting with the Board of Directors and continuing throughout the organisation. The promotion of corporate transparency, fairness and accountability is led by a highly qualified independent Board accountable to shareholders, aided by a seasoned and experienced management team.
DBS is guided in its corporate governance practices by the Code of Corporate Governance (“the Code”) issued by the Singapore Council on Corporate Disclosure and Governance and the Banking (Corporate Governance) Regulations issued by the Monetary Authority of Singapore (“the MAS regulations”).
BOARD GOVERNANCE
Board composition
The present board size of 12 members is appropriate for the current size of DBS Group and the scope of its operations. The current size allows for efficiency and encourages active dialogue among its members; however there is room to increase by one or two to accommodate the availability of an outstanding candidate or the Board’s changing needs and circumstances.
Board appointment and independence
DBS has reviewed its policy of appointing directors for a maximum of three two-year terms and considers that the Group’s interests would be better served by moving to a maximum of three three-year terms. The longer period will ensure that the Group can continue to draw on the knowledge, experience and expertise of some of our longer-standing directors.
The existing procedure of directors retiring by rotation and reelection of directors by shareholders at the annual general meeting remains. At the same time, directors may serve on the Board until the age of 70 and once attained, will require shareholders’ approval to serve every year thereafter.
Selection and qualification of Board members
The Board’s Nominating Committee (NC) reviews and recommends all director appointments. The candidates’ qualifications and experience are benchmarked against the criteria set out in statutory regulations and in DBS’ Articles of Association to help the NC make an assessment of the candidates’ suitability and potential contribution to the Group. Any candidate considered by the NC must have extensive experience and hold senior positions, whether in the public or private sector, and must have built a reputation that demonstrates the ability to contribute to discussions and to make decisions at board level. At the same time, the candidate must have demonstrated that he or she is committed to the highest ethical standards. The NC ensures that the composition of the Board comprises a diverse range of industry expertise and experience that management can benefit from.
The current Board includes industry captains drawn from a wide range of sectors within and outside banking, as well as the public sector. Of the 12-member board, seven are Singapore citizens or permanent residents, and five are non-Singaporeans.
The NC assesses the independence of the directors based on criteria set out in the MAS regulations and the Code. The NC considers a director independent if he is not related to a substantial shareholder or to senior management, and if he does not have significant business relationships with companies in the DBS Group. Seven directors – Mr Ang Kong Hua, Mr Andrew Buxton, Mr Goh Geok Ling, Mr Leung Chun Ying, Mr Narayana Murthy, Mr John Ross and Mr Wong Ngit Liong (Mr NL Wong) – are considered independent by the NC.
Mr Ang, Mr Buxton, Mr Goh, Mr Leung, Mr Murthy and Mr NL Wong are directors of companies that engage in business dealings with the Group. However, the NC has determined that the nature and scope of the business relationships do not undermine the independence of these directors. Mr Ang, Mr Buxton, Mr Goh and Mr Leung are also directors of companies linked to Temasek Holdings, DBS’ substantial shareholder. Their appointments are non-executive in nature and they are not involved in the day-to-day conduct of these companies’ businesses. The NC has therefore determined that their independence is not compromised by their directorships in these Temasek-linked companies. Mr Ross is not a director of any company having business dealings with the DBS Group. Neither is he a director of any Temasek-linked companies.
The other five directors (Mr Jackson Tai, Mr Frank Wong, Mr Koh Boon Hwee, Mr Kwa Chong Seng and Mr Peter Ong) are considered by the NC to be non-independent under the MAS regulations. Mr Tai and Mr Frank Wong are executive directors. Mr Koh and Mr Kwa are non-executive directors of Temasek Holdings. Mr Ong is a senior civil servant in the Singapore government which is Temasek’s ultimate owner.
Separation of the role of the Chairman and the Chief Executive Officer
In DBS, the Chairman and the Chief Executive Officer (CEO) positions are held by separate individuals. The responsibilities of the Chairman and the CEO have been formalised by the Board.
The Chairman manages and leads the Board in its oversight over management. He ensures that there are active and comprehensive discussions on matters brought up to the Board, and steers the Board in making sound decisions. Members of the Board have free access to management and vice versa. Members of the Group Management Committee, the highest management decision making body in the Group, are also invited to attend all Board meetings except those sessions involving only the non-executive Board members. At annual general meetings and other forums, the Chairman plays a pivotal role in fostering constructive dialogue between shareholders, the Board and management. Shareholders’ questions and concerns are adequately attended to and addressed at the annual general meetings.
The CEO heads the Group Management Committee. He oversees the execution of the Group’s corporate and business strategy, and is ultimately responsible for managing its day-to-day operations.
Board responsibilities and accountability
The Board is responsible for setting the strategic vision, direction, and long-term goals of the Group. It is responsible for the selection, appointment and annual appraisal of the CEO and other key senior executives and ensuring that a succession and development plan for all key positions is in place to prepare for contingencies, as well as to facilitate a smooth management transition.
Matters that require Board approval include the Group’s annual budget and strategic three-year plan, strategic acquisitions and divestments, fund-raising exercises, the Group’s risk governance framework and limits and any major decisions that may have an impact on the Group’s reputation.
The Board emphasises professionalism, integrity and honesty as being key to the Group’s image and reputation. These core values and principles which all DBS staff must adhere to are set out in the DBS Staff Code of Conduct and govern all dealings by DBS staff with internal and external counterparts.
Board meetings and attendance
Five scheduled Board meetings are conducted a year. At these meetings, the Board reviews the Group’s financial performance, corporate strategy, business plans, potential strategic acquisitions or alliances, strategic or significant operational issues and significant matters attended to by Board committees. The Board also reviews the Group’s long term corporate strategy and business plans, including principal issues and challenges that the Group may face in the future in at least one of the Board meetings during the year. In addition to the scheduled meetings, ad hoc meetings are also held when necessary.
When exigencies prevent a Board member from attending meetings in person, he can participate by tele- or video conference. Board approval for less critical matters may be obtained through written resolutions approved by circulation.
In 2006, the Board held one meeting in Hong Kong, underscoring the growing significance of the Group’s Hong Kong franchise, and the Group’s commitment to Greater China, as a key priority market for growth.
Board directors attend the annual general meeting, Board meetings and meetings of the sub-committees on which they serve, and they spend the time needed to properly discharge their responsibilities. Materials and information important to the understanding of the matters to be reviewed during the meetings are distributed to the directors in advance of the said meetings to provide sufficient time for the directors to prepare.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS |
|
|
No. of Meetings |
No. of Meetings |
No. of Meetings |
No. of Meetings |
held@ |
Attendance |
held@ |
Attendance |
held@ |
Attendance |
held@ |
Attendance |
6 |
6 |
- |
- |
4 |
4 |
9 |
4 |
6 |
6 |
- |
- |
- |
- |
9 |
9 |
6 |
6 |
- |
- |
- |
- |
9 |
6 |
6 |
4 |
5 |
5 |
4 |
4 |
- |
- |
Andrew Buxton
(Appointed on
17 Feb 06 (Board),
3 Apr 06
(BRMC)) |
6 |
4 |
- |
- |
3 |
1 |
- |
- |
6 |
6 |
5 |
5 |
- |
- |
9 |
8 |
6 |
5 |
- |
- |
4 |
4 |
9 |
5 |
6 |
5 |
- |
- |
- |
- |
- |
- |
6 |
4 |
- |
- |
- |
- |
- |
- |
6 |
5 |
5 |
5 |
4 |
4 |
- |
- |
6 |
4 |
- |
- |
4 |
2 |
- |
- |
6 |
5 |
- |
- |
- |
- |
- |
- |
|
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS (CONT'D) |
|
|
No. of Meetings |
No. of Meetings |
No. of Meetings |
held@ |
Attendance |
held*@ |
Attendance |
held@ |
Attendance |
4 |
4 |
0 |
0 |
3 |
3 |
4 |
4 |
- |
- |
- |
- |
4 |
4 |
- |
- |
- |
- |
- |
- |
0 |
0 |
- |
- |
Andrew Buxton
(Appointed on
17 Feb 06 (Board),
3 Apr 06
(BRMC)) |
- |
- |
- |
- |
- |
- |
4 |
3 |
- |
- |
3 |
3 |
4 |
4 |
- |
- |
3 |
3 |
- |
- |
0 |
0 |
3 |
2 |
- |
- |
0 |
0 |
3 |
2 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
0 |
0 |
3 |
2 |
@ |
the number of meetings held during the period the director was a member of the Board and/or relevant Committee |
* |
There were 7 matters deliberated and approved via circular resolutions. |
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Board training and information access
Directors undergo comprehensive orientation and training
programmes. A new director, on appointment, is briefed and
provided with written guidance on a director’s role and
responsibilities. The new director is also briefed by the CEO and
business and support unit heads on the Group’s operations.
Management ensures that the Board receives regular reports
on the Group’s financial performance and operations, and that
the Board is provided with relevant information and
comprehensive analysis to facilitate discussions on specific
matters and issues. The Board is also regularly briefed on
accounting and regulatory changes, as well as major industry
and market developments. Training courses were conducted
for the Audit Committee on more complex issues pertaining
to Business Combinations, Intangible Assets and Impairment.
The Audit Committee was also updated on the changes to
the Financial Instruments measurement standard as well as the
new FRS 107 on Financial Instrument disclosures. Training
courses for the Board Risk Management Committee were
conducted on Basel II Credit Risk, the Integrated Risk
Framework, as well as the Economic Capital Framework.
Each business and support unit head certifies to the CEO and the
Chief Financial Officer (CFO) every quarter that, as far as he is
aware, there are no circumstances that would render the Group’s
financial statements misleading. The CEO and CFO in turn provide
an official undertaking to the Audit Committee and to the
external auditors, Ernst & Young, confirming that the financial
statements have been properly drawn up.
Directors have unrestricted access to all DBS employees. The Board
has the power to engage outside expert advice from sources
independent of management at the expense of the Group.
The Company Secretary attends Board meetings and ensures that
all relevant regulations and established procedures regarding the
conduct of the Board are complied with.
Board performance
A process is in place to assess the performance and effectiveness
of the Board as a whole and of each individual director.
For the collective appraisal, each director assesses the Board’s
performance and provides feedback to the Chairman of the Board
and the Chairman of the Nominating Committee. Both chairmen
consolidate the feedback and present the results to the Board
annually. The Board has found the collective assessment useful in
evaluating its own effectiveness, as directors have provided
constructive suggestions for improvement.
Currently, the Board’s performance is judged on the basis of
accountability for the Group’s operations as a whole, rather
than solely on financial criteria such as return on equity or
return on assets.
For individual assessments, each director is evaluated on the basis
of his attendance at meetings and contribution to Board
discussions. Each director completes a self and peer evaluation
form, which is seen only by the Chairman of the Board. The results
of a director’s appraisal are communicated to him when feedback
indicates that his contribution to the Board could be enhanced.
BOARD COMMITTEES
The Board has established six committees to enhance its
effectiveness. Each committee has its terms of reference which set
forth the responsibilities of that committee and the qualifications
for committee membership, in line with the Code and the MAS
regulations. The Board and each committee have the power to
hire any independent legal, financial or other advisors as they
deem necessary.
Audit Committee The Audit Committee comprises Mr Ang (Chairman), Mr Goh and
Mr Ong, all non-executive Directors.
The Committee reviews the Group’s financial statements before
submission to the Board. The Committee is briefed on significant
changes to accounting standards and policies and its impact on
the Group’s reported results. The Committee also assesses the
effectiveness of the Group’s internal controls and procedures.
The Group’s external auditors are accountable to the Committee.
The external auditors present their audit plan of the Group, their
evaluation of the Group’s internal accounting controls and their
long form audit report to the Committee for approval. The terms
of the external auditors’ appointment, their effectiveness,
independence and objectivity, and the amount of non-audit
services provided during the year, are reviewed by the Committee.
The heads of Group Audit and Group Legal, Compliance and
Secretariat as well as the Group’s external auditors attend all
committee meetings. The Committee also holds a separate session
with the external auditors without the presence of management
at each committee meeting.
The Committee has reviewed the financial statements with
management and the external auditors and is of the view that the
Group’s financial statements for 2006 are presented in conformity
with generally accepted accounting principles in all material aspects.
The Committee has considered the business relationship between
the Group and the external auditors for 2006, taking into account
the amount of non-audit services provided. The Committee is
satisfied that the nature and extent of such services have not
prejudiced the external auditors’ objectivity and that they can be
considered independent.
The Committee also performs an annual assessment of the
effectiveness of the Group’s Internal Audit function and ensures
that Internal Audit has adequate resources to fulfill its mandate.
Board Credit Committee
The Board Credit Committee comprises Mr Koh (Chairman),
Mr Tai, Mr Frank Wong, Mr Goh and Mr Kwa. All credit exposures
exceeding the limit delegated by the Board to management are
approved by this Committee.
Board Strategy and Planning Committee The composition of the Board Strategy and Planning Committee is
the same as the Board Credit Committee. This Committee serves
as a forum where members deliberate on strategic matters,
including potential mergers and acquisitions, alliances and fundraising
exercises, before these matters are raised to the Board for
discussion or approval.
Board Risk Management Committee The Board Risk Management Committee comprises Mr Kwa
(Chairman), Mr Ang, Mr Buxton, Mr Koh, Mr Ong and Mr Ross.
The Committee is responsible for oversight of risk governance, risk
framework and limits for the Group. It approves the overall risk
governance framework as well as the framework for credit,
market and operational risks, including the applicable limits.
The Committee also monitors the Group’s risk profile, including
risk trends and concentrations. The Committee is responsible for
carrying out specific responsibilities, including approving certain
policies, in accordance with regulatory requirements. During the
year, the Committee approved the material aspects of the Internal
Ratings Based Approach under Basel II, and reviewed the results of
independent reviews of the Bank’s internal rating systems.
Compensation and Management Development Committee The Compensation Committee comprises Mr Kwa (Chairman),
Mr Goh, Mr Koh, Mr Leung, Mr Murthy and Mr NL Wong.
The Committee reviews and approves the remuneration of each
executive director, and the annual aggregate, performance related
cash bonuses and share grants for DBS employees. It also
provides oversight on the remuneration of senior executives and
oversees the management development and succession planning
for key positions.
In 2006, the Committee finalised the Group compensation
philosophy and the overall framework. With the compensation
philosophy and framework broadly in place, the Committee
intends to balance its focus between compensation and people
development with the aim of building a talent pipeline for the
future. To better reflect the role of the Committee, the Committee
has been re-named as the Compensation and Management
Development Committee.
Nominating Committee The Nominating Committee comprises Mr Leung (Chairman),
Mr Ang, Mr Koh, Mr Murthy and Mr NL Wong.
Details of the terms of reference of the Committee are discussed in
the section under “Selection and qualification of Board members”
above. In addition to reviewing board appointments, the Committee
also approves the appointments of business and support unit heads
and senior positions in major subsidiaries. The Committee also reviews
appointments to the Group Management Committee.
REMUNERATION MATTERS
Remuneration policy
The Group’s remuneration policy is built on a transparent appraisal
system and formulated to drive performance of its employees,
who are its most important asset. The remuneration policy is
therefore fundamental to achieving the Group’s corporate goals.
Employees’ remuneration
Employees’ remuneration is based on total compensation. An
employee’s total compensation is benchmarked to the market and
consists of three components: fixed pay, cash bonuses and long term
incentives. Each component plays a distinct role in the
makeup of the total compensation package. The long-term
incentives are share grants and share options.
The Group’s approach to rewarding employees not only helps to
attract, retain and motivate talented employees but also fosters a
performance-oriented culture across the organisation that will
help attain the Group’s financial objectives.
Directors’ remuneration
The remuneration for executive directors and fees for non executive
directors reflect the scope and extent of a director’s
responsibilities and obligations. They are measured against
industry benchmarks and are competitive.
Remuneration of Non-executive Directors Directors receive basic directors’ fees. Additional fees are given to
members of certain Board committees.
Directors are encouraged to invest half of their fees in DBSH
shares and to hold not less than 50% of these shares for the
duration of their terms. Directors’ fees are approved by
shareholders at the annual general meeting.
The current fee structure is set out below. An increase in the
basic retainer paid to Directors is being proposed to bring it more
in line with market norms. The Audit Committee Chairman and
Audit Committee member fees are also being increased to reflect
the increasingly onerous obligations being imposed on the Audit
Committee. All increases are subject to shareholders’ approval at
the forthcoming annual general meeting.
Annual fees for the Board |
|
Current |
New |
Board Chairman: |
$85,000 |
$105,000 |
Director: |
$50,000 |
$70,000 |
|
Additional fees for membership in board committees |
Audit Committee
Board Risk
|
$35,000 |
$50,000 |
$20,000 |
$35,000 |
$35,000 |
No change |
$20,000 |
No change |
Board Credit
|
Committee/
Board Strategy
and Planning
Committee |
|
$35,000 |
No change |
$20,000 |
No change |
Compensation and
|
Management Development
Committee |
|
$35,000 |
No change |
$20,000 |
No change |
Nominating
|
$17,500 |
No change |
$10,000 |
No change |
|
Remuneration of Executive Directors
Certain principles are adopted by the Compensation and
Management Development Committee in determining the
remuneration for executive directors. Principally, the remuneration
should motivate the executive directors to achieve the Group’s
annual and long-term goals to ensure that they are aligned with
shareholders’ interests. Performance-related elements therefore
form a significant part of executive directors’ total remuneration.
The Board endorses the Compensation and Management
Development Committee’s recommendation for each executive
director’s remuneration.
Executive directors are appointed under standard employment
terms which include provisions for basic salary and performance
bonus. There is no special provision for early termination of services.
Breakdown of Directors’ remuneration The following table shows the composition of directors’
remuneration for 2006. Directors who were appointed or who
resigned or retired during the year are included in the table.
BREAKDOWN OF DBSH DIRECTORS’ REMUNERATION FOR PERFORMANCE YEAR 2006(1)
(1 JAN 2006 – 31 DEC 2006) |
|
$7,500,000 – $7,749,999 |
|
|
|
|
|
|
24 |
32 |
39 |
1(1) |
4 |
100 |
13 |
37 |
44 |
1(1) |
5 |
100 |
|
|
|
|
|
|
Below $250,000 |
|
|
|
|
|
|
Koh Boon Hwee |
- |
- |
- |
84 |
16 |
100 |
- |
- |
- |
100 |
- |
100 |
- |
- |
- |
100 |
- |
100 |
- |
- |
- |
100 |
- |
100 |
- |
- |
- |
100 |
- |
100 |
- |
- |
- |
100 |
- |
100 |
- |
- |
- |
100 |
- |
100 |
- |
- |
- |
100 |
- |
100 |
- |
- |
- |
100 |
- |
100 |
- |
- |
- |
100 |
- |
100 |
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Key executives’ remuneration
Although the Code recommends that at least the top five key
executives’ remuneration be disclosed within bands of $250,000,
the Board believes such disclosure would be disadvantageous
to the Group’s business interests, given the highly competitive
conditions in the banking industry where poaching of executives
is commonplace.
Long-term share incentives – DBSH Share Plan, Share Option
Plan and Share Ownership Scheme
As the Group seeks to foster a culture that aligns the interests of
employees with those of shareholders, it has put in place share based
plans for employees. These plans allow employees to share
in the Group’s growth and success. There are three plans – the
DBSH Share Plan (“Share Plan”, previously known as the DBSH
Performance Share Plan), the DBSH Share Option Plan (“SOP”)
and the DBSH Share Ownership Scheme (“SOS”).
Employees holding the corporate rank of Managing Director,
Senior Vice President and Vice President are eligible to participate
in the Share Plan and SOP.
Rewards made under the Share Plan and SOP form part of an
employee’s annual performance remuneration, which also includes
cash bonuses. The portion of the performance remuneration paid
in shares increases with the amount of the performance
remuneration.
There are vesting periods for the Share Plan and SOP. The number
of shares eventually awarded upon vesting under the Share Plan is
based on DBS Group’s performance for a three-year performance
period as measured by the Group’s return on equity. The
aggregate total number of new DBSH ordinary shares that may be
issued under the Share Plan and SOP at any time may not exceed
7.5% of the issued ordinary shares of DBSH.
Shareholders approved granting time-based awards under the
Share Plan at the annual general meeting held in 2006. Such
awards operate like restricted share awards and will vest only
after an employee completes a satisfactory period of service to
the Group. These awards will be granted in 2007 as part of
employees’ deferred bonuses, as based on the Group’s overall
performance and the individual’s past performance. The allocation of such awards will be linked to performance metrics designed
to deliver shareholder value. Details of the Share Plan and SOP
appear in pages 111 to113 of the Directors’ Report.
Employees who are not eligible for the Share Plan or SOP are
eligible to participate in the SOS. The SOS is a market purchase plan administered by DBS Trustee Ltd, a wholly-owned subsidiary
of DBS Bank. Under the SOS, all confirmed employees with at
least one year of service can subscribe up to 10% of their monthly
base pay to buy units of DBSH ordinary shares, with DBS
contributing an additional 50% of the amount the employee
contributes.
Share Options
Issued
In compliance with listing requirements, the following participants in the SOP received the following number of options: |
|
Nil |
440,175 |
0 |
440,175 |
Nil |
448,050 |
0 |
448,050 |
|
No further share options were issued by the Group in 2006.
The aggregate number of options granted to the directors and
the employees of the DBS Group since the commencement of
the SOP till the end of 2006 is 62,796,690.
RELATED PARTY TRANSACTIONS
The Group has procedures to comply with existing regulations
governing related party transactions for banks and listed
companies. These regulations include the Banking Act, MAS
directives and the guidelines on interested person transactions in
the SGX Listing Manual. New directors are briefed on the relevant
provisions that they need to comply with. If necessary, existing
credit facilities to related parties are adjusted prior to a director’s
appointment, and all credit facilities to related parties are
monitored on an on-going basis.
The Group has granted credit facilities to the following related
parties in the ordinary course of business on normal terms and
conditions. The outstanding amounts of these credit facilities
and the estimated values of collaterals as at 31 December 2006
are as follows:
|
DBSH Directors and their
related entities |
27 |
# |
121 |
- |
represented on their boards |
62 |
70 |
- |
- |
|
|
|
|
– |
engaged in financial activities |
|
1,463 |
3 |
1,696 |
1,820 |
– |
engaged in non-financial activities |
|
276 |
65 |
414 |
3 |
|
As required under the SGX Listing Manual, the following are
details of interested person transactions in 2006:
|
CISCO Security Pte LtdBranch cash delivery, collection and
processing services, self-service banking
cash services, static armed guard services,
renovation
projects and maintaining of
security equipment |
$21,761,619
|
National Computer Systems Pte LtdSystem support/maintenance and other
IT related services |
$1,993,171
|
NETS Credit card and ATM card personalisation |
$360,000 |
Singapore Airlines Ltd
Air tickets |
$4,736,452 |
Singapore Computer Systems Ltd
Procurement operations, document
management, imaging and storage
and other services |
$4,014,936 |
Singapore Telecommunications Ltd
Subscription for usage-based telecom
services |
$13,000,000 |
SNP Sprint Pte Ltd
Personalisation/despatch of cheque books
and security documents
printing |
$1,669,736 |
CapitaLand Limited
New and renewal of leases for
branch
premises/ATMs |
$665,111 |
HSBC Institutional Trust Service
(Singapore) Limited as Trustee of
CapitaMall Trust
New and renewal of leases
for branch premises |
$6,177,827 |
HarbourFront Centre Pte Ltd
(a subsidiary of Mapletree
Investments Pte Ltd)
New and renewal of leases for
branch premises |
$3,120,630 |
SMRT Trains Ltd
Renewal of leases for branch
premises/ATMs |
$616,150 |
DEALINGS IN SECURITIES
DBS has adopted more stringent “black-out” policies than
prescribed under the Best Practices Guide issued by the SGX.
DBS employees are prohibited from trading in DBS shares and
securities one month before the release of the half-year and full year
results and three weeks before the release of the first quarter
and third quarter results. In addition, directors and employees are
prohibited at all times from trading if they are in possession of
material non-public information. Employees with access to price sensitive
information in the course of their duties must obtain
prior approval to trade in any securities listed in Singapore and
Hong Kong. Such employees are also instructed to trade through
the Group’s stockbroking subsidiaries. In addition, business units
and subsidiaries engaging in proprietary trading and discretionary
trading of securities on behalf of customers are restricted from
trading in DBS securities during the black-out period.
COMMUNICATION WITH SHAREHOLDERS
Dissemination of information
The Group maintains an active dialogue with shareholders.
It holds in-person briefing sessions or telephone conference calls
with the media and analysts when quarterly results are released.
All press statements and quarterly financial statements are
published on the DBS and SGX websites. A dedicated investor
relations team supports the CEO and CFO in maintaining a close
dialogue with institutional investors.
During the year, management met more than 200 local and
foreign investors in more than 200 meetings. Management also
participated in five non-deal investor conferences and road shows
comprising two to the US and one each in Europe, Hong Kong
and Singapore.
The Group embraces and commits to fair, transparent and timely
disclosure policy and practices. All price-sensitive information or
data are publicly released, prior to individual sessions held with
investors or analysts.
Shareholder meetings
The Group views the annual general meeting as an opportune
forum for retail investors to meet the Board and senior
management. The CFO presents the Group’s preceding year’s
financial performance to all shareholders present ahead of formal
proceedings of the meeting. The Group’s external auditors are also
available to answer shareholders’ queries.
In accordance with the recommendations of the Code of
Corporate Governance, resolutions requiring shareholder approval
are tabled separately for adoption at the AGM unless the matters
for consideration are closely related and would more appropriately
be considered together.
INTERNAL AUDIT AND INTERNAL CONTROLS
Internal Audit
Group Audit is an independent function that reports directly to
the Audit Committee and the CEO. Group Audit meets or exceeds
the Standards for Professional Practice of the Institute of Internal
Auditors in all key aspects. The professional competence of the
Group’s internal auditors is maintained or upgraded through
training programmes, conferences and seminars that provide
updates on auditing techniques, regulations and banking products
and services.
An annual audit plan is developed under a structured risk
assessment approach that examines all of the Group’s activities and
entities, their inherent risks and internal controls. Audit assignments
are identified based on this approach and audit resources are
focused on the activities deemed to carry higher risks.
The progress of corrective actions on outstanding audit issues is
monitored monthly through a centralised Group-wide tracking
system. Information on outstanding issues is categorised
according to severity and monthly reports are sent to the Audit
Committee Chairman, the Chairman of the Board, senior
management and all Group heads.
All audit reports which are rated as requiring attention are copied
to the Audit Committee, the external auditors and senior
management. The regulators are also apprised of all relevant audit
matters and may request for further information on audit matters
at any time.
The head of Group Audit is Edmund J Larkin, who has more than
20 years of experience in internal audit, risk management and
operations with global financial institutions and public accounting
firms. Mr Larkin has full access to the Audit Committee and senior
management, and his appointment is approved by the Committee.
Group Audit works closely with the external auditors and meets
them regularly to discuss matters of mutual interest, to strengthen
working relationships and to co-ordinate audit efforts. The
external auditors review the effectiveness of the Group’s internal
controls and risk management during an annual statutory audit.
Material non-compliance with established practices and
procedures and regulations, as well as internal control weaknesses
noted during the audit, together with recommendations, are
reported to the Audit Committee, which ensures that high-risk
outstanding issues are dealt with in a timely manner.
Internal controls
A sound system of internal controls requires a defined
organisational and policy framework. The Group has a
management framework that clearly defines the roles,
responsibilities and reporting lines of business and support units.
The delegation of authority, control processes and operational
procedures are documented and disseminated to staff. The Group
Audit, Group Risk and Group Legal, Compliance and Secretariat
functions provide independent oversight over controls and risks
within the Group.
The Audit Committee and the Board Risk Management
Committee have reviewed the adequacy of DBS’ control
environment. The Board believes that the system of internal
controls in place up to the date of this report, is adequate for the
current business scope and operations of the Group.
RISK MANAGEMENT APPROACH AND RISK PROFILE The Group sees strong risk management capabilities as vital to the
success of a well-managed bank. The Group Risk Management
function is the central resource for driving such capabilities in DBS,
and it complements the risk and control activities of other
functions including Group Audit and Group Legal, Compliance
and Secretariat. More on risk management can be found in the
following section.
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