Private banks must disclose all 'conflicted remuneration'

THE recent wave of defaults in high-risk unrated bonds in Singapore has raised fresh scrutiny on how the bonds were sold.

Based on analyses by Bloomberg, bond issuers have taken to offering rebates of up to one per cent to private banks to sell their bonds, a form of remuneration that was apparently not disclosed to clients. It is estimated that at least half of some S$875 million worth of bonds that have defaulted since November were sold to private clients, including issuers such as Swiber Holdings, PT Trikomsel Oki and Pacific Andes Resources Development. To be sure, in a "lower-for-longer" rate environment…