Singapore's DBS bank says commodities is its top growth business
SINGAPORE Oct 17 (Reuters) - Commodities financing has become the fastest growing business for Singapore bank DBS Group Holdings less than two years after it entered the segment, benefiting from the withdrawal of some European lenders in Asia, its CEO said.
Southeast Asia's biggest and most profitable bank has built a nearly S$25 billion ($20.48 billion) loan book by funding the trade in products such as oil and coal, said chief executive Piyush Gupta. About 100 people work in the unit that provides trade finance as well as hedging and broking to clients.
It marked the first time DBS -- whose biggest shareholder is Singapore state investment firm Temasek Holdings with a 29.5 percent stake -- has revealed details of its commodities business.
"It is the fastest growing part of our book right now," Gupta said at a news conference on the opening of the bank's new headquarters in Singapore.
"It has been timely as the European banks withdrew over the last year. Our ability to step into the space and supplement some of the requirements of our customers was actually very proficuous," he said.
Other Asian banks have also stepped in to fill the gap left by European lenders such as Credit Agricole and Societe Generale, which are scaling back their Asian operations to conserve capital amid the euro zone debt crisis.
A stiffer regulatory environment governing the trade of U.S. linked futures contracts is also causing some banks to curtail their commodities financing activities.
Analysts and loan bankers have said DBS has been the most aggressive among Singapore's banks in entering the commodities funding market. Its main local rivals Oversea-Chinese Banking Corp and United Overseas Bank have so far not disclosed data on the business.
Asia-focused Standard Chartered also has boosted its commodities funding businesses in recent years, analysts said.
Gupta said DBS's commodities business has units in London Singapore, Hong Kong and the Greater China region.
"We are focused on multiple classes, but principally around energy, base metals and around softs," he said, adding that energy accounts for about half of the business.
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