DBS has successfully executed its first synthetic securitisation transaction, marking a significant milestone as the first Singapore bank to do so. The transaction references a US$1b diversified portfolio of corporate loans, enhancing DBS’ ability to optimise capital and support client financing as it expands across the region.
Synthetic securitisations, or Significant Risk Transfer (SRT) transactions, are a strategic tool used by global banks for capital and risk management. This transaction allows investors to share in the credit risk of the referenced portfolio, thereby reducing the regulatory capital DBS must hold against these assets. Consequently, DBS can redirect this capital towards new lending and growth opportunities whilst retaining ownership and servicing of the underlying loans.
Despite DBS’ capital ratios exceeding regulatory requirements, this transaction strengthens its capacity to meet Asia’s growing demand for financing. It also lays the groundwork for future SRT transactions, further expanding DBS’ capital management capabilities.
Philip Fernandez, Group Corporate Treasurer at DBS, stated, “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.”
This initiative underscores DBS’ commitment to innovation in financial markets, building on its history of pioneering financial structures, including its role in Singapore’s covered bond market.
