DBS completes first Singapore bank significant risk transfer deal referencing US$1B loan portfolio

SINGAPORE: On Tuesday (June 30), DBS announced the completion of a significant risk transfer (SRT) transaction referencing a US$1 billion (S$1.29 billion) diversified portfolio of corporate loans.

SRT transactions, or synthetic securitisations, are used by global banks to manage capital and risk. In this deal, investors take on part of the loan portfolio’s credit risk, allowing DBS to free up capital for new lending and growth opportunities, while still retaining ownership and servicing of the loans.

In its announcement, the bank did not name the third-party investors involved.

The deal marks the first such transaction by a Singapore bank, strengthening DBS’ ability “to maintain strong capital and balance sheet discipline and prudently capture opportunities” as it continues to scale its franchise across the region, DBS Group Corporate Treasurer Philip Fernandez said.

DBS said that while its capital ratios remain well above regulatory requirements, the transaction enhances its ability to support Asia’s rising demand for financing and expands its capital management toolkit.

It added that “it also establishes a foundation for the bank to selectively execute more SRT transactions in future.”

Mr Fernandez added that the bank was also “pleased to contribute to the continued development of Singapore’s financial markets by introducing globally established risk management solutions to the region.” /TISG

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