DBS Executes Singapore’s Inaugural Synthetic Securitisation

DBS Executes Singapore’s Inaugural Synthetic Securitisation

DBS has successfully completed Singapore’s inaugural synthetic securitisation, transferring credit risk on a $1 billion corporate loan portfolio to liberate capital for further lending throughout Asia.

DBS has executed the first synthetic securitisation transaction by a Singapore bank, marking a milestone in the development of the city‑state’s capital markets and expanding the lender’s capacity to finance clients across Asia.

The transaction involves a diversified portfolio of corporate loans valued at $1 billion and forms part of the bank’s broader capital‑management strategy. Although DBS retains ownership and servicing of the underlying loans, a portion of the associated credit risk is transferred to investors, thereby reducing the regulatory capital required against the portfolio.

Optimising Capital Allocation

Synthetic securitisations, also referred to as Significant Risk Transfer (SRT) transactions, are commonly employed by leading international banks to optimise capital allocation while preserving lending capacity. By releasing regulatory capital, DBS can redeploy resources toward new financing opportunities as it expands across the region.

Although the bank’s capital ratios remain comfortably above regulatory requirements, the transaction adds a new instrument to its capital‑management framework. DBS expects the inaugural deal to lay the groundwork for selectively executing additional SRT transactions in the future.

Preparing for the Next Growth Phase

Philip Fernandez, Group Corporate Treasurer at DBS, said the transaction strengthens the bank’s ability to maintain balance‑sheet discipline while supporting future growth. He added that introducing an internationally recognised risk‑management structure also contributes to the continued development of Singapore’s financial markets.

The deal represents another step in DBS’s efforts to broaden access to sophisticated capital‑markets solutions in Asia. It also follows the bank’s history of introducing new funding structures to Singapore, including its pioneering role in the domestic covered‑bond market.

For investors, the transaction provides exposure to a diversified portfolio of corporate loans without requiring the bank to sell the underlying assets, illustrating the growing use of structured‑credit techniques in Asia’s banking sector.

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