DBS Group Holdings said it will have adequate capital after meeting a requirement by Singapore’s central bank to set aside $230 million following last month’s disruption in banking services on the island.

The July 5 network failure is of “grave concern” to the Singapore-based bank, according to an e-mailed statement today from Southeast Asia’s biggest lender and service provider International Business Machines Corp.

 

The Monetary Authority of Singapore asked DBS to set aside the funds as regulatory capital, according to an earlier statement today. The bank also needs to reduce its dependence on a single service provider as well as review and remedy any weaknesses in its technology systems, the central bank said, censuring the lender for causing “significant inconvenience” to customers.

 

DBS’s banking services at its Singapore branches and automated teller machines were disrupted for more than six hours on July 5 following errors during a repair by IBM. The Armonk, New York-based company said it took disciplinary action against the employees involved, and reviewed procedures for its staff.

 

“DBS Bank did not exercise sufficient oversight of the maintenance, functional and operational practices and controls employed by IBM,” the central bank said in its statement. “The incident has revealed weaknesses in DBS Bank’s technology and operational risk management controls.”

 

DBS’s Tier 1 capital, an indicator of the bank’s ability to absorb losses, will shrink to 12.9% following the additional capital allocation, from 13.1% as of June 30, it said in the statement. Its total capital adequacy ratio will narrow to 16.3% from 16.5%, it said.

 

The additional capital requirement, calculated as a proportion of some risk-weighted assets as of June 30, will be reviewed after the central bank is satisfied that DBS has put adequate controls in place, MAS said today.