DBS has announced a 1-for-2 rights issue at S$5.42 (45% discount to lastclosing, 35% discount to theoretical ex-rights price) to raise S$4b.Largest shareholder, Temasek Holdings, will sub-underwrite 33.3% of rightsissue and has undertaken to fully subscribe for its entitlement of 27.6%.The rights issue is underwritten by Citigroup, Goldman Sachs, JPMorgan,Morgan Stanley and UBS.

Offer information statement will be dispatched and trading of "nil-paid"rights will commence on 6 Jan 09. The rights shares are expected tocommence trading on 2 Feb 09.

Rights issue provides resilience to weather the financial storm. The rightsissue will strengthen DBS' balance sheet and allows the bank to weather thefinancial storm even if we go through a protracted recession. Tier-1 CARwill improve from 9.7% to 11.8%. If we exclude qualifying preferred andhybrid instruments, core tier-1 CAR will improve from 7.8% to 9.9%.Management highlighted that organic growth remains priority and the capitalraising was not intended to fund M&A activities or to cover extraordinaryprovisions.

Trading update. DBS also issued a trading update for 4Q08 results. Totalincome is expected to be stable compared to 3Q08 with higher net interestincome offset by lower fee income due to market-sensitive activities. Netprofit is expected to be moderately lower than 3Q08 if we excluderestructuring cost from reduction of headcount in 3Q08 and one-time chargefor investment in TMB. DBS will maintain dividend of 20 cents/share for4Q08.

DBS is proposing a 1-for-2 Rights Issue at S$5.42. Based on thepre-suspension price of S$9.85, this is at a 45% discount or a 35% discountto the theoretical ex-rights price of S$8.37

The issue is fully underwritten by Citigroup, Goldman Sachs, JP Morgan,Morgan Stanley and UBS. Key shareholder, Temasek Holdings (which has anaggregate holdings of 27.6%), has agreed to subscribe for up to one-thirdof the Rights Issue.

After adjusting for the net proceeds (of about S$4 billion), its pro formaconsolidated core Tier 1 (less qualifying preferred and hybrid instruments)and Tier 1 ratios would increase to 9.9% and 11.8%.

Shares trade ex-Rights :29 Dec 2008 from 9am
Books Closure Date : 31 Dec 2008 at 5pm
Last date and time for trading of nil-paid Rights : 14 Jan 2009 at 5pm
Expected date for commencement trading of Rights Shares : 2 Feb 2009 at 9am