DBS completes $1B synthetic securitisation transaction

DBS today announced the successful completion of its inaugural synthetic securitisation transaction, referencing a $1 billion diversified portfolio of corporate loans. The transaction enhances DBS’ capacity to optimise capital and support client financing needs, as the bank continues to scale its franchise across the region. In addition, this is the first such transaction undertaken by a Singapore bank, underscoring DBS’ ongoing efforts to broaden access to innovative solutions across the region’s financial markets.

Synthetic securitisations, also known as significant risk transfer (SRT) transactions, are widely used by global banks as part of prudent capital and risk management. Through this transaction, investors bear a share of the referenced portfolio’s credit risk, enabling them to gain exposure to loan portfolios underwritten by the bank. This allows DBS to reduce the regulatory capital held against these assets and redeploy it towards new lending and growth opportunities, while continuing to own and service the underlying loans.

While DBS’ capital ratios are well above regulatory requirements, this new capability enhances the bank’s ability to support Asia’s rising demand for financing and reflects the bank’s ongoing expansion of its capital management toolkit. It also establishes a foundation for the bank to selectively execute more SRT transactions in the future.

Philip Fernandez, group corporate treasurer, 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. This builds on our track record of bringing innovative structures to market, such as our pioneering role in Singapore’s covered bond space.”

Re-disseminated by Wealth and Society