(June 30): DBS Group Holdings Ltd said it completed its inaugural significant risk transfer, referencing a US$1 billion ($1.29 billion) diversified portfolio of corporate loans, as it seeks to free up capital for growth.
The transaction, also known as a SRT, enables DBS to securitise the credit risk of the portfolio and redeploy capital toward new lending and other growth opportunities. DBS will retain ownership of, and continue servicing the underlying loans, the bank said in a statement on Tuesday.
SRTs have become an increasingly popular way for banks to free up capital without selling loans or raising fresh equity. By transferring a part of the credit risk on loan portfolios to investors, lenders can support new lending, acquisitions and shareholder payouts while maintaining regulatory capital ratios.
Sumitomo Mitsui Banking Corp’s (SMBC) Asia Pacific arm completed its first US$3.2 billion synthetic risk transfer deal with Blackstone Inc, Stonepeak Partners and Clifford Capital last year. SMBC is sounding out investors about at least two more SRTs.
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