Singapore's DBS Bank, has said that it is exposed to letters of credit (L/Cs) provided to Swiber Holdings shortly before the collapse of the oil services company.

The protracted slump in oil prices and the failure of a private equity firm to buy US$200 million preference shares helped send Swiber Holdings over the edge, analysts said.

L/C exposure

Singapore's largest bank said it has 700 million Singapore dollars (S$700 million - US$522) million of exposure to the firm and its units, and that it only expects to recover about half of the amount. About S$300 million of that exposure is secured by collateral, including property and vessels, DBS said in a statement.

But "project-related working capital facilities" are largely unprotected and comprise trade facilities such as L/Cs as well contingent exposure such as performance bonds, the bank said.

Bank support

DBS was supporting Swiber Holdings until just before the troubled oil services company said it was unable to pay its debts.

The bank provided a bridging loan to Swiber shortly before it filed for liquidation.

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