DBS Bank Completes Singapore’s First Synthetic Securitisation to Optimize Capital
DBS Bank has executed Singapore’s inaugural synthetic securitisation transaction, referencing a $1.29 billion (US$1 billion) diversified portfolio of corporate loans to enhance its capital management framework. Under this structure, also known as a significant risk transfer (SRT) transaction, investors take on a portion of the portfolio’s credit risk. This mechanism allows DBS to lower the regulatory capital required for these assets while retaining ownership and remaining the servicer of the underlying corporate loans.
The bank noted that the landmark transaction strengthens its ability to optimize capital efficiency and redeploy resources toward fresh lending and regional growth initiatives. It also builds a strategic foundation for DBS to selectively pursue future SRT deals.
While the bank’s capital ratios continue to sit comfortably above regulatory minimums, this newly established capital management capability is designed to support growing credit demand across Asia. Philip Fernandez, Group Corporate Treasurer at DBS, stated that the transaction bolsters the bank’s capacity to maintain strict balance sheet discipline while backing the ongoing expansion of its regional franchise. By completing the deal, DBS becomes the first Singaporean bank to leverage a risk management structure that is already widely utilized across global financial markets.
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