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CEO takes $3M pay cut due to digital banking service failures.

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TLDR:

  • DBS Group Holdings, the largest bank in Southeast Asia, reported a record performance with a 26% rise in full-year net profits. However, CEO Piyush Gupta and other senior managers are taking pay cuts due to disruptions in the bank’s digital banking services.
  • DBS faced five major disruptions throughout 2023, including an outage in March and a technical issue in October that prevented customers from accessing banking services. The bank has promised to set aside $59.56 million to improve system reliability.
  • The Monetary Authority of Singapore ordered DBS to pause non-essential IT changes for six months and barred the bank from acquiring new business ventures for the same period.

DBS Group Holdings, Singapore‚Äôs largest lender and the largest bank in Southeast Asia by assets, announced a record performance with a 26% rise in full-year net profits to $7.63 billion. Despite the positive results, CEO Piyush Gupta and other senior managers are taking pay cuts due to disruptions in the bank’s digital banking services.

Gupta took a 30% pay cut to his variable pay, amounting to $3.08 million, while other members of the management committee took a 21% pay cut. The bank’s board believes that the pay cuts are necessary to hold the CEO and senior managers accountable for the disruptions to the company’s digital banking services throughout 2023.

DBS faced five major disruptions in its digital banking services throughout the year. In March, some of DBS’s online services went offline for up to nine hours. Then in October, a technical issue in an Equinix data center prevented DBS and Citibank customers from accessing banking services, causing an outage lasting over twelve hours. These disruptions prompted the Monetary Authority of Singapore (MAS), the country’s central bank, to impose temporary restrictions on DBS. The MAS barred DBS from acquiring new business ventures for six months and ordered the bank to pause non-essential IT changes for the same period.

To improve system reliability, DBS has committed to setting aside $59.56 million. In November, the bank’s chairman, Peter Seah, promised that “senior management will be held accountable, and this will be reflected in their compensation.”

Gupta, who took over as CEO of DBS Group in 2009, has expanded the bank’s operations in India, Taiwan, and mainland China. Despite softening interest rates and persistent geopolitical tensions, Gupta predicts that the bank will likely sustain its performance in 2024. In addition, DBS announced a one-time bonus for junior and lower-income employees to offset higher costs of living.

Shares of DBS rose by as much as 2.8% following the announcement of the bank’s record performance. It is the first of Singapore’s major banks to report its earnings, with United Overseas Bank Ltd. and Oversea-Chinese Banking Corp set to report later in the month.

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