DBS apologizes for comments in failed bid

DBS has been on a buying spree but pulled out of the latest round of consolidation in Singapore's banks

By staff and wire reports

SINGAPORE -- The largest bank in Southeast Asia, DBS Group, apologized Wednesday for slamming a rival in its failed bid for Overseas Union Bank.

DBS has also agreed to pay $554,900 (S$1.0 million) each to United Overseas Bank and the target bank OUB for comments made during its bid.

Singapore's largest bank effectively pulled out of the running to buy OUB on Monday. It said it would not raise its June offer of S$9.4 billion for the bank, the fourth-largest in Singapore.

United Overseas Bank, Singapore's second-biggest bank, topped the DBS bid with a S$10 billion friendly takeover offer to OUB at the end of June.

Offer would lead to 'paralysis and infighting'

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In a nine-page document distributed to investors in Europe, DBS ran down UOB's offer. It said the takeover target's shareholders "should chastise its board and management" if they accepted the bid.

DBS also said that the combination was "designed to keep family control intact without regard to shareholder value," and that the merger was "likely to be disrupted by decision paralysis and infighting."

OUB and UOB then complained to Singapore's authorities. Both have now accepted the apology from DBS.

The move defuses a possible defamation suit. DBS sent letters to the chairmen of both banks and on Wednesday is running the apology in local media.

DBS chairman S. Dhanabalan writes that he is "very angry and upset" and apologizes "unreservedly for the distress the statements must have caused you and the members of the board."

"What has happened is not reflective of the way DBS does things," he added. "However, we accept responsibility."

DBS says the document was prepared by an overseas office of investment bank Goldman Sachs, which was advising DBS, and didn't go through the bank's normal checking procedures.

A call to Goldman Sachs for comment was not immediately returned.

Team bound for Europe

A DBS team is slated to travel to Europe to undo damage with shareholders who received the document, 'Preliminary Analysis of UOB Bid,' given out during a July roadshow.

DBS, formerly known as the Development Bank of Singapore, is 37 percent owned by the Singaporean government. It had $65 billion in assets at the end of last year.

It has been on a buying spree, snapping up Hong Kong's Dao Heng bank earlier this year. That merger is being finalized.

DBS stock climbed to a three-week high on Tuesday, after it scrapped its bid for OUB. But it was trading down 0.7 percent at S$13.40 on Wednesday afternoon.

Reuters contributed to this report.