DBS pays for bad-mouthing of rivals during takeover spat

DBS Group, the Lion City's largest lender, has apologised and paid compensation to rivals United Overseas Bank (UOB) and Overseas Union Bank (OUB) for critical comments made by its adviser during the takeover battle for OUB.

Full-page announcements were published in local newspapers yesterday detailing letters between DBS chairman S. Dhanabalan and his counterparts at UOB and OUB, Wee Cho Yaw and Lee Hee Seng.

Mr Dhanabalan said he was 'very angry and upset' about written remarks prepared by Goldman Sachs, some of which suggested directors at family-controlled UOB were ignoring shareholder value when they forged a friendly tie-up with OUB.

Singapore has a reputation for tough legal action over written or spoken comments that are perceived as defamatory. However, such tactics are typically used by members of the ruling People's Action Party against political opponents and are not common in the commercial arena.

Mr Dhanabalan said that the DBS had agreed to pay S$1 million (about HK$4.3 million) to both OUB and UOB. The money will be given to charities and public bodies nominated by the two banks, which hammered out a merger to fend off a hostile bid by DBS for OUB. Goldman Sachs declined to comment.

The incident is the latest in a series of public-relations setbacks for DBS during a round of bank consolidations which will see five listed players reduced to three.

DBS' initial S$9.5 billion offer for OUB was criticised in some quarters as having been poorly handled, especially its decision to go hostile. In addition, an early run of DBS newspaper advertisements on its offer were ill-received for appearing to be presumptive.