* Singapore vault is Deutsche Bank's second-biggest after London
* Demand for physical gold as investment increasing - executive
SINGAPORE, June 10 (Reuters) - Deutsche Bank has launched its second-biggest gold-storage vault in Singapore that can hold up to 200 tonnes of the metal as it looks to capture surging global demand for physical bullion.
Gold prices are near a two-year low and down 17 percent in 2013, after 12 straight years of annual gains. A sell-off in April released years of pent up demand, especially in Asia, stretching regional supply and pushing spot premiums to records.
Singapore last year excluded gold traded for investment from sales tax, prompting interest in buying and storing bullion in the city-state.
"There is a growing interest to buy physical gold for investment purposes," Mark Smallwood, head of wealth planning at Deutsche Asset & Wealth Management for the Asia-Pacific region, told Reuters in an interview.
Traditional storage facilities are in London, Zurich and New York. But Deutsche Bank has seen a need to diversify some of that storage, he said.
"The time is ripe for a facility in the region (Asia-Pacific) to pick up steam. We believe that Singapore is well positioned to develop as a complementary custody and trading platform to the traditional hubs," Smallwood said.
Deutsche Bank's facility is at the Singapore Freeport, a warehouse for items such as precious metals, art and wine located at the airport.
The vault in Singapore is Deutsche Bank's second-biggest after London, Smallwood said. The bank, which also has vaults in Zurich and Hong Kong, is sub-leasing space from Malca-Amit, a provider of storage facilities for valuables.
JPMorgan opened a similar facility at the Singapore Freeport in 2010.
Deutsche Bank already has precious metals trading, financing and physical distribution operations in Singapore.