G O
VER N
A N
C E
Whenrequired,DBSwilltakepossessionofthecollateralitholds assecuritiesandwilldisposeofthemassoonaspracticable,
withtheproceedsusedtoreducetheoutstandingindebtedness. AbreakdownofcollateralheldforNPAisshowninNote41.2to
theFinancialStatementsonpage173.Repossessedcollateralis classiiedinthebalancesheetasotherassets.Theamountsof
suchotherassetsfor2014and2013werenotmaterial.
5.2 Credit Risk Mitigants
Collateral Received Wherepossible,DBStakescollateralasasecondaryrecoursetothe
borrower.Collateralincludescash,marketablesecurities,properties, tradereceivables,inventoryandequipmentandotherphysicaland
inancialcollateral.Wemayalsotakeixedandloatingchargeson theassetsofborrowers.Ithasputinplacepoliciestodetermine
theeligibilityofcollateralforcreditriskmitigation,whichinclude requiringspeciiccollateralstomeetminimumoperational
requirementsinordertobeconsideredaseffectiveriskmitigants.
Whenacollateralarrangementisinplaceforexposuresarising fromderivative,repurchaseagreementrepoandotherrepo-style
transactionswithinancialmarketcounterparties,thesearecovered undermarketstandarddocumentationsuchasMasterRepurchase
AgreementsandInternationalSwapsandDerivativesAssociation ISDAAgreements.Collateralreceivedismarkedtomarketon
afrequencymutuallyagreedwiththecounterparties.Theseare governedbyinternalguidelineswithrespecttotheeligibilityof
collateral.Intheeventofadefault,thecreditriskexposureis reducedbymasternettingarrangementswhereDBSisallowedto
offsetwhatweowetoacounterpartyagainstwhatisduefrom thatcounterpartyinanetting-eligiblejurisdiction.
Collateraltakenforcommercialbankingisrevaluedperiodically, dependingonthetypeofcollateral.Whilerealestateconstitutes
thelargestpercentageofcollateralassets,wegenerallyconsider thecollateralassetstobediversiied.
Helpingourcustomerstorestructurerepaymentliabilities,intimes ofdificulty,isourpreferredapproach.However,shouldtheneed
arise,expeditiousdisposalandrecoveryprocessesareinplacefor disposalofcollateralheldbyDBS.Wealsomaintainapanelof
agentsandsolicitorsfortheexpeditiousdisposalofnon-liquid assetsandspecialisedequipment.
Collateral Posted DBSisrequiredtopostadditionalcollateralintheeventofarating
downgrade.Asat31December2014,foraonenotchdowngrade ofitsStandardPoor’sRatingsServicesandMoody’sInvestors
Servicesratings,DBSBankwouldhavetopostadditionalcollateral amountingtoSGD106millionandSGD35millionrespectively.
Other Risk Mitigants DBSalsousesguaranteesascreditriskmitigants.WhileDBSmay
acceptguaranteesfromanycounterparty,itsetsinternalthresholds forconsideringguarantorstobeeligibleforcreditriskmitigation.
5.3 Internal Credit Risk Models