DBS to compensate customers

DBS, Singapore's biggest bank, fell 5.5 percent to S$10.96 after saying yesterday it expects to spend as much as S$80 million ($53 million) to compensate customers who bought products tied to now-bankrupt Lehman Brothers Holdings Inc.

Although this is bad news for shareholders in the short term, it is in fact a good news in the long term. Why? Because by doing this, it maintains its reputation which is important for banks. Without trust, the financial system cannot work.

By compensating, DBS acknowledge that they have made a mistake and is willing to be responsible. This will be one of the events that will shape DBS corporate governance and maintain its rationality to seek long term value for its shareholders instead of acquiring short term profits which is little in comparison to its overall value and reputation.