DBS Group Holdings, Southeast Asia’s biggest lender, said it is confident of meeting South Korea’s ceiling on foreign-currency forwards, citing a strong capital position.

“DBS is confident of complying with the new guidelines well within the government’s stipulated timeframe by smoothly managing our currency forward positions,” DBS’ spokeswoman Karen Ngui said today in an email. DBS’s tier 1 risk-based capital ratio, a key measurement of its ability to withstand losses, was 13.4% at the end of the first quarter.

The Korean government said on June 13 that foreign bank branches are required to cut currency derivatives to 250% of equity capital under changes recommended to President Lee Myung Bak’s regulatory reform committee. The regulations allow a maximum two years for existing positions to be covered or capital increased.

 

Daiwa Securities Group Inc. and DBS may have to cut their currency forward positions in South Korea as their holdings exceed the new government limits, the Chosun Ilbo newspaper reported today, citing figures it said were from the Bank of Korea. The Bank of Korea said it didn’t disclose a document listing the amount of foreign-currency positions held by foreign banks, according to an e-mailed statement today.