DBS Bank taps Singapore-China bilateral currency swap facility

Move targeted to further open up of opportunities by providing RMB financing to Singapore-based companies exporting to China.

DBS Bank on Wednesday said it has applied to the Monetary Authority of Singapore (MAS) to tap the bilateral currency swap agreement established between the central banks of Singapore and China, to provide RMB financing to a Singapore-based company exporting to China. This groundbreaking initiative further underlines DBS’ leadership in the RMB market in Singapore.

Under an agreement signed in July last year, the MAS and the People’s Bank of China (PBOC) had established a SGD 30 billion bilateral currency swap arrangement for the purpose of promoting bilateral trade and direct investments between the two countries, as stated in a DBS report.

According to International Enterprise Singapore, China was Singapore’s second largest trading partner in 2010, with total trade amounting to SGD 95.3 billion. By tapping the swap line facility, DBS is able to provide customers with the option of settling their trades in RMB, instead of in more conventional USD terms. This comes amid burgeoning trade and investment flows between China and the rest of Asia.

Mr. Sim S. Lim, Country Manager of DBS Singapore said, “As a leading Asian bank, DBS constantly seeks to be on the forefront of new market developments which bring value to customers. DBS is happy to be the early mover bank in Singapore to tap the MAS-PBOC bilateral swap facility to meet client needs. The swap facility presents interesting opportunities to the market, providing an alternative source of RMB funding outside China, which will boost two-way trade flows and investments between Singapore and China.”

Mr. Andrew Ng, DBS Group Head of Treasury and Markets said, “Besides trade finance, over time, we hope to tap the swap line to make available RMB to our clients undertaking approved activities in China. China is the world’s leading destination for foreign direct investments (FDI), and this is underscored by FDI into China crossing the USD 100 billion mark for the first time in 2010. We welcome the further opening up of opportunities and will participate responsibly in the healthy development of the market, in keeping with the spirit of the bilateral agreement.”