DBS readies 'dim sum' bonds

Updated: 2012-02-15 10:54

By Gao Changxin (China Daily)

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DBS readies 'dim sum' bonds

A building of DBS Group Holdings Ltd in Singapore. According to the bank, it is waiting for the right time to issue yuan-denominated, or "dim sum", bonds at a favorable rate, adding that all the regulatory and preparatory work has already been completed. [Photo / Bloomberg]

Singaporean lender says offering will target institutional investors

SHANGHAI - The Singaporean bank DBS Group Holdings Ltd said on Tuesday that it plans to issue up to 2 billion yuan ($317 million) in yuan-denominated, or "dim sum", bonds, in China's onshore interbank fixed income market.

The issue, approved by regulators last year, will target institutional investors such as insurance companies, and the bonds will have a maturity of two to three years, said Melvin Teo, China CEO of DBS, Southeast Asia's biggest lender, at a news conference in Shanghai.

Teo added that all the regulatory and preparatory work has already been completed and that the bank is waiting for the right time to issue the bonds at a favorable rate.

However, the offering is aimed at helping regulators further explore the depth of the country's bond market, rather than addressing the bank's own liquidity issues. "We are highly liquid," said Teo.

DBS is also on track to roll out its first investment products under the qualified domestic institutional investor (QDII) program, through which banks and fund managers can invest clients' money overseas, within set limits.

The lender has been granted a quota of $100 million by the regulators.

Group CEO Piyush Gupta told reporters that the decision was made in the wake of the recent slowdown in yuan appreciation, which has given QDII products the potential to deliver higher returns.

DBS doubled its net profit in China in 2011 to about 500 million yuan, a record high for the bank in the country. The lender registered revenue of around 1.9 billion yuan last year, up 65 percent year-on-year. Loans grew by 24 percent as the number of clients surged 44 percent.

Last year marked a shift of focus in DBS's corporate banking business in China, as it moved from servicing foreign multinationals to working with Chinese companies - especially large State-owned enterprises - and blue-chip companies with international ambitions, said Gupta.

The banking business with large corporate clients was the main factor contributing to the doubling of profit.

Last year, DBS helped Baosteel Group Corp, China's second-largest steelmaker by output, to issue dim sum bonds worth 3.6 billion, the largest-ever issuance of that type of bond.

The lender also participated with other banks to provide an $800 million syndicated loan that enabled China Huaneng Group to buy the US-based utility InterGen NV.

DBS plans to conduct business with more than 1,000 large Chinese companies with international ambitions in the coming years, said Gupta.

The bank plans to hire another 400 employees in China this year, after a hiring spree last year raised its staff numbers to 1,600 from 1,100. Around 30 percent of those hired this year will be account managers with good connections with State-owned companies, according to Teo.

Most of the remainder will staff the new branches and outlets that the bank expects to open this year. Last month, DBS opened its 25th outlet in China in the western city of Chongqing.