DBS

DBS announced that it agreed to sell its Shenton Way office buildings to
funds managed by Goldman Sachs for S$690m. The transaction is expected to
be completed within a month. The Shenton Way offices consist of the
49-storey Tower One and 34-storey Tower Two. The buildings have a net
lettable area of 875k square feet. DBS will lease back the areas that it
currently occupies for an initial period of 8 years, followed by an option
to renew the lease for two three-year periods at market rates.

The net book value of the buildings was S$240m as at 30 Nov 05. DBS has
guided a net gain recognition of S$300m for 2005. The balance will be
amortised to offset rentals and other expenses associated with this
transaction. The net financial impact during subsequent years is expected
to be negligible.

DBS' unrealised revaluation surpluses of S$756m as of 30 Sep 05 has already
been factored into our RNTA valuation methodology. Hence, this transaction
will have minimal impact on our RNTA valuation.

Our call on DBS remains HOLD. DBS' exposure to developed economies such as
Singapore and HK will mean slower growth potential in the years ahead. We
do not believe DBS' exposure in HK will help it gain a foothold in the
fast-expanding China banking market. Hence, we maintain our preference for
OCBC, whose exposure to Malaysia and Indonesia is a plus for future growth
potential.