High Notes 5 fiasco

The boardroom veteran turns dead serious when he talks about the recent High Notes 5 fiasco that the bank has become embroiled in.

About 1,400 investors sank $103 million into High Notes 5, a structured product which DBS issued and sold. The product was linked to Lehman Brothers and when the investment bank collapsed, the investment became worthless.

Some are alleging the products were mis-sold to them by relationship managers who never explained the risks fully.

'We have learnt something from this and I believe that we will do things differently. Not all of it is going to be popular,' he says.

But he draws the line at other suggestions for change, like blanket rules that completely ban the sale of some investments to 'vulnerable' investors who are elderly or lowly-educated.

'Using indicators like age or education is not particularly effective,' he says.

'I like to think that when I'm 62, I can still invest without somebody telling me that when I'm past a certain age, I can't.

'And some very successful business people who are extremely astute never made it past secondary school or college. Are we going to tell them, because they have only 10 years of education, they are not qualified to do this?'

Neither is he supportive of a nationwide crackdown on relationship managers and sales targets in banks that some have blamed for hard-sell on the ground.

'I think selling is something that happens in all businesses. There is not going to be an easy substitute for having quotas for salespeople for any kind of product, whether you sell computers or automobiles,' he says.

'You walk into a shopping mall or even food joints and you are always being besieged by salespeople. But you can't totally check your personal accountability at the door and say that because I was being sold, I took it.'

Mr Koh warns that cracking down too hard on the sales process could prove bad for Singapore as a financial centre, if Singapore says no and financial innovation happens elsewhere.

'We will always be in the backwaters, we will sit there and wait for people to come to us,' he says.

'Well, the world is not going to beat a path to Singapore's door. I think it would be wrong to be so blanket about it, for Singapore and for our banking industry.'

When asked about the damage that the High Notes 5 fiasco has dealt DBS' reputation and whether in retrospect, the bank should not have sold the product, he cedes little ground.

'We don't like the fact that our customers have lost money, no one does,' he says.

'Are there individual instances where we could have done better? The answer is yes, and we will make restitution.'

What is not correct, says Mr Koh, is to simply assume that all relationship managers are irresponsible, or that they all set out to mislead customers.

'Many of our people believed in the products at the time that they were launched because many DBS staff members bought the same products.

'The bank believed in the product because we took the customers' money and invested it accordingly.'

Mr Koh also urges perspective.

'In the month of September alone, the loss on the Singapore stock market was $95 billion. In October, $125 billion.

'So the crisis is personal to us because our customers have been affected, but this crisis is also very broad, because it affects almost everyone across the board.'