DBS has completed a US$1 billion synthetic securitisation deal, giving the bank more capacity to lend while marking a first for a Singapore bank.
The transaction references a diversified portfolio of corporate loans and is DBS’ first synthetic securitisation.
Synthetic securitisations, also known as Significant Risk Transfer transactions, are widely used by global banks for capital and risk management.
They allow investors to take on part of the credit risk linked to a loan portfolio.
DBS continues to own and service the underlying loans, while the structure reduces the regulatory capital it needs to hold against those assets.
This allows the bank to redeploy capital into new lending and growth opportunities.
The bank noted that its capital ratios remain well above regulatory requirements, but the transaction gives it more flexibility as demand for financing grows across Asia.
The deal also expands DBS’ capital management options and lays the groundwork for the bank to carry out more selective SRT transactions in future.
Philip Fernandez, Group Corporate Treasurer at DBS, said,
“This debut transaction strengthens our ability to maintain strong capital and balance sheet discipline and prudently capture opportunities as we scale our franchise.
We are also pleased to contribute to the continued development of Singapore’s financial markets by introducing globally established risk management solutions to the region.”
Featured image: Edited by Fintech News Singapore, based on image by sanigo718 via Magnific
