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Thursday May 15, 10:34 AMDBS eyes $550 mln share sale for growthSINGAPORE, May 15 (Reuters) - DBS , Southeast Asia's biggest bank by assets, could sell as much as S$750 million ($544 million) in preference shares, a source said on Thursday, as it pushes ahead with expanding its business.DBS Group Holdings' move to raise funds for growth is in sharp contrast to other big banks that have been forced to shore up their books in the wake of writedowns due to a credit crisis. Richard Stanley, the bank's new chief executive, last week unveiled plans to expand existing business in key markets such as China, India and Indonesia. DBS said it would sell non-convertible hybrid Tier 1 securities, but did not disclose the size of the offering. A source familiar with the plans told Reuters the deal could be worth S$500-S$750 million. "If market conditions are favourable then it could be more," the source said, speaking on condition of anonymity as details of the deal were not yet publicly available. LOAN GROWTH Analysts said the capital raising might also be needed to catch up with local rivals United Overseas Bank and Oversea-Chinese Banking Corp and sustain loan growth. DBS' capital adequacy ratio was 13.4 percent, with the Tier 1 at 9.2 percent at end-March, above the regulatory requirement of 6 percent. UOB's Tier 1 stood at 9.9 percent and OCBC's at 12.2 percent. "If you are growing your loan book at 20-25 percent, you need more capital to sustain that growth," said David Lum, analyst at Daiwa Institute of Research. DBS shares rose 1.4 percent in early trade, trading up 0.8 percent at S$20.18 by 0224 GMT. The bank recorded loan growth of 21 percent in the first quarter from a year earlier, led by corporate lending, but analysts say growth could slow in the second half as a likely U.S. recession hurts Asian economic growth. Chief Financial Officer Jeanette Wong said in a statement that the proceeds from this issue would strengthen DBS' capital position and support the growth of its Asian business. DBS, in which state investor Temasek [TEM.UL] has a 28 percent stake, took a previously announced S$86 million ($62 million) of writedowns in the first quarter on complex derivatives exposed to risky debt, which pushed its trading income into the red. The writedown was much lower than last year when it wrote down S$270 million on structured instruments, the bulk in the fourth quarter, including debt exposed to the collapsing U.S. subprime mortgage market. (Editing by Jan Dahinten & Ian Geoghegan) |
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