Buy DBS for $440 million

Minus Dao Heng, that''s basically what the bank is worth

This week's S$2.2 billion ($1.2 billion) new equity raising by DBS made everyone sit up and think about the institution that started the year as Singapore's premier banking force.

Interestingly enough, you could now buy that banking force for $440 million, so great has been the destruction of value this year.

I tease a little, but bear with me.

DBS's share price hit a low last week of S$9.50 a share, which equates to a $6.3 billion market capitalization.

Meanwhile, it will be recalled, DBS bought Dao Heng for $5.86 billion earlier in the year. So theoretically, DBS's operations in Singapore, Thailand and Indonesia (ie DBS minus Dao Heng) are worth only $440 million - according to investors (the only people that matter).

You can draw that conclusion. Or else you can conclude that DBS simply paid way too much for Dao Heng.


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