SINGAPORE - DBS Group Holdings chief executive Piyush Gupta said on Monday (Aug 8) that its client Swiber Holdings imploded in six weeks.
"There were no indications that this was coming," said Mr Gupta at a media briefing on the bank's quarterly results.
DBS earlier on Monday reported a 6 per cent drop in second quarter earnings after a jump in bad debt allowances for oil services firm Swiber. Provisions for non-performing loans more than doubled, led by a charge of S$150 million for Swiber, which has been placed under judicial management.
DBS revised up its total exposure to Swiber to S$721 million from S$700 million announced previously. Its total non-performing loans (NPLs) grew 31.1 per cent to S$3.26 billion in the second quarter, with NPL ratio sitting at 1.1 per cent, up from 0.9 per cent a year ago and 1 per cent a quarter ago.
Singapore's biggest lender also disclosed earlier on Monday that it had S$23 billion exposure to the struggling oil and gas sector, of which S$7 billion was to oil services firms excluding Swiber.
Swiber, which provides construction services for international oil and gas projects, stunned investors when it filed a petition last week to liquidate its operations after a US$200 million share sale to private equity firm AMTC fell through. The firm subsequently dropped the liquidation in favour of a plan to operate under judicial management, which would allow it to continue business under court supervision while it attempts to turn itself around.
"I still believe the best outcome for Swiber is the judicial management and getting its projects going again," said Mr Gupta.
He said S$403 million of DBS' total exposure to Swiber went to finance working capital for two projects.
"Eighty per cent of the first project is done. Fifty per cent of the second project is done. The question is 'Do you want to put in extra money to recover more?' ", said Mr Gupta. " Judicial management is still the most viable objective for Swiber."
Mr Gupta also said also said it was "uncertain" whether AMTC will come through with financing despite a report over the weekend by the Business Times that the deal is still alive.