SINGAPORE — DBS Group, Singapore’s biggest bank by assets, said on Tuesday it has completed a synthetic securitization transaction tied to a $1-billion portfolio of corporate loans, the first such deal by a Singapore bank.
The deal, also known as a significant risk transfer transaction, allows investors to take on part of the credit risk of the loan portfolio. Development Bank of Singapore (DBS) keeps and services the loans while reducing the regulatory capital it must hold against them.Synthetic securitizations are widely used by global banks to manage capital and risk, and DBS is the first lender in Singapore to carry it out.DBS said the transaction would help it manage capital more efficiently and support more client financing as it expands across the region.It said the deal also lays a foundation for the bank to selectively execute more such transactions in the future.On a larger scale, this represents a growing trend of major financial institutions leveraging structural capital management tools to free up lending capacity and improve balance sheet flexibility.Philip Fernandez, DBS’ group corporate treasurer, said the deal would help the bank keep strong balance sheet discipline while pursuing growth opportunities.DBS said its capital ratios were well above regulatory requirements.
