Move underscores T&M’s ambition to be leading Asian currency and fixed income house following exponential growth.
DBS Bank, which has seen its Treasury and Markets (T&M) business grow exponentially over the last decade, on Thursday announced that it will be investing SGD 250 million to fuel the franchise’s next phase of expansion in order to become a leading Asian currency and fixed income house. This is in line with DBS’ strategic roadmap unveiled by CEO Piyush Gupta in February, in which one of the bank’s stated priorities is to build out its T&M capabilities across the region, according to a DBS report.
The investment, to be made over the next five years, will enable the bank to ramp up its T&M capabilities in key Asia growth markets and to capture new opportunities especially in China and India. In particular, with the increasing internationalisation of the RMB, DBS is focused on leveraging its Greater China franchise to build a strong RMB business spanning foreign exchange, bonds, structured products and hedging solutions. DBS was one of the first few banks to offer RMB structured deposits in Hong Kong last month. In India, where DBS has the largest network of a Singapore bank, with 12 branches, the bank intends to set up a debt capital markets business to help Indian corporates access an alternative source of funding.
Plans are also underway to develop an enhanced FX online platform which will enable corporate customers, including SMEs across the region, to access foreign exchange rates for a comprehensive suite of Asian currencies 24/7 and on a real-time basis.
In Singapore, where DBS has one of the largest SGD trading books and is also the most active market maker for USD/SGD, SGD bonds, SGD rates, SGD money markets and SGD derivatives, the bank will continue to entrench its leadership position. For example, when DBS relocates its headquarters to the Marina Bay Financial Centre in 2013, the T&M team will operate out of a dealing room which is 40% larger than its current premises at Shenton Way.
Said Andrew Ng, Head of DBS Treasury and Markets at DBS: “Asia is our backyard and we want to fully leverage our homeground advantage to establish a leading Asian currency and fixed income franchise. Over the last 10 years, T&M has enjoyed significant growth but with this being Asia’s decade, there are many opportunities to further partner our clients. As we invest to enhance our regional T&M capabilities and scale up across Asia, by 2013, we expect more than 55% of T&M’s revenues to come from outside Singapore, up from 35% currently, and just over 10% in 2000.”
In 2000, DBS signalled its commitment to being a serious player in the Asian T&M space with the establishment of the USD100 million DBS Asia Treasury Centre. This Centre supports the trading of foreign exchange, interest rates, equity, credit, fixed income instruments and the provision of investment and risk advisory services.
Over the last decade, DBS’ T&M franchise has enjoyed tremendous success, with total revenues up by approximately five times, underpinned increasingly by customer flows.
T&M is a specialist and a leading participant in Asian currencies. In Singapore, DBS today is one of the largest players in both SGD money markets as well as SGD related interest rate flows. In the SGD-bond market, year to date, DBS is the leader with a 39.1% market share, up from 21.3% in 2000. DBS is among the top three market makers in regional currency swaps.
Over the last 10 years, DBS T&M has also increased its geographic presence in Asia. In 2000, it had a presence in two markets – Singapore and Hong Kong. Today, this has expanded to seven markets, including China, Taiwan, India, Indonesia and South Korea.
DBS is consistently recognised for the strength of its T&M franchise. The bank was named “Best FX Provider, Regional Winner (South East Asia)” in Global Finance’s Annual Survey for the last three years. Accolades won in 2010 include “Best Derivatives House in Singapore” by The Asset, “Best Debt House in Singapore” by Euromoney and “Best Foreign Exchange Bank in Singapore” by FinanceAsia. Last year, in Asiamoney’s Poll of Polls, DBS was voted as the “Best local/ domestic FX bank in Singapore since 1991”.
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