DBS Group on negative credit watch after Dao Heng offer: S&P

SINGAPORE (AFX-ASIA) - Standard & Poor's said it has placed DBS Group on credit watch with negative implications after the group made its offer to buy Dao Heng Bank for at least 41.90 bln hkd.	    "S&P is concerned about the impact of the proposed acquisition on DBS' capital profile. The acquisition price implies a goodwill component of about 5.0 bln sgd, which if deducted from DBS' existing equity base of 8.29 bln sgd would reduce equity to 3.29 bln sgd, " the rating agency said.	    "Consequently, DBS' adjusted common equity-to-assets ratio after consolidation with Dao Heng would fall to about 3.50 pct from 8.60 pct," it said.	    Although the acquisition enables DBS to diversify its regional position, S&P said the overall asset book of the enlarged group would reflect a heightened degree of risk, given the greater volatility of the Hong Kong market compared to Singapore.	    "Nevertheless, this is partly mitigated by the demonstrated prudence of both DBS and Dao Heng in asset underwriting," it said.       

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