International Financing Review Asia February 10 2018 15
Please send job moves to
[email protected]Singapore says
more covered
bonds, please!
Singapore’s major banks have repeated
calls for a relaxation of the cap on covered
bond issuance to promote the development
of a local market for senior secured bonds.
The Monetary Authority of Singapore’s
encumbrance limit restricts banks from
using more than 4% of their assets as
security for covered bonds. As a result, only
the city’s biggest banks have sold covered
bonds, and none have issued in the local
market.
“We are somewhat constrained by the
encumbrance limit,” said Yeoh Hong Nam,
executive director, head of wholesale
funding at DBS Bank, speaking last Tuesday
at the Euromoney/European Covered Bond
Council Asian Covered Bond Forum in
Singapore.
“We need to balance our presence in
the market to maintain investor access,
but need to maintain reserve capacity for
issuance in stressed conditions.”
DBS, OCBC and United Overseas
Bank have raised more than US$7bn
from covered bonds in the offshore
market. However, other Singapore-based
banks, which are subsidiaries of foreign
institutions and have smaller asset bases,
have found the limited size of their issues
unviable, given that the cost of establishing
a covered bond programme might run into
millions of dollars. Some might only be
able to issue one benchmark-sized bond
before reaching the encumbrance limit.
These smaller banks are likely to be
the main issuers of Singapore dollar-
denominated covered bonds because DBS,
OCBC and UOB have such low costs of
funding in their home currency that they
would rather save their encumbrance
limits to issue offshore at tight spreads.
As a result, no bank has established
programmes to issue covered bonds in
Singapore dollars so far.
“Four per cent is a reasonable starting
point, but, for longer-term development, I
would think having a higher limit would
enable the development of the covered
bond market in Singapore,” said Ang
Suat Ching, head of funding and capital
management at OCBC Bank.Banks must exclude their high-quality
liquid assets when calculating their total
assets, reducing the total amount they can
issue under the encumbrance limit.
“In that sense, our 4% is a very high-
quality 4%,” said Ang.
Bankers have suggested that the MAS
could allow HQLAs to be counted towards
total assets, increasing the amount of
covered bonds each bank can issue, rather
than raise the encumbrance limit.
h4HEREûISûSOMEûmEXIBILITYûFORûUSûASû
a jurisdiction to tweak that without
changing the number,” said Brandon Goh,
lRSTûVICEûPRESIDENT ûCENTRALûTREASURY ûATû
UOB.
Australia and New Zealand have higher
ENCUMBRANCEûLIMITSûOFûûANDû û
respectively, while some other jurisdictions
have no limits at all.
Speaking earlier at the same conference,
!LANû9EO ûDIRECTORûOFûTHEûlNANCIALûMARKETSû
development department at MAS, said
it had received feedback from market
participants about raising the encumbrance
limit. There was no indication, however, of
whether MAS planned to raise the limit or
change how it was calculated.
DANIEL STANTONWHO’S MOVING WHERE...
DEUTSCHE BANK has appointed Duncan Mann and
Apurva Shah as co-heads of financial sponsors for
Asia Pacific. They replace Mohamed Atmani, who is
leaving the bank.
Mann has been with Deutsche some eight years
and was promoted to managing director last year.
He is due to relocate from Sydney to Hong Kong
shortly.
Shah is a Mumbai-based managing director and
has been with Deutsche since 2005. He has also
worked at Citigroup and Merrill Lynch.
Deutsche hired Atmani as regional head of
financial sponsors only 16 months ago. He has
worked at UBS, Credit Suisse and ABN AMRO.
FIDELITY INTERNATIONAL has named Jenn-Hui Tan
head of capital markets and corporate governance
for Asia Pacific.
He replaces Kirsty Mactaggart, who left last year
as head of equity capital markets and corporate
finance.
Tan has been with Fidelity for over 10 years and,
until his new post, was director for corporate
finance.
Based in Singapore, he reports to Tim Orchard,
chief investment officer for APAC ex-Japan.
HOULIHAN LOKEY has hired Edward Middleton as
co-head of financial restructuring in Asia.
Based in Hong Kong, he was recently a partner
at KPMG where he was head of its restructuring
services practice in China and Asia-Pacific for the
last 10 years.
Middleton has been appointed co-head alongside
Brandon Gale, who has been with the US
investment bank since 2004 and relocated to
Singapore in 2013. SC LOWY has hired Rajiv Mareachealee to lead its
Hong Kong-based debt capital markets business.
Mareachealee has worked at Credit Agricole,
where he was last head of high-yield capital
markets and special situations in Asia.
He has also been with investment firm Sandell
Asset Management, Dresdner Kleinwort
Wasserstein, Merrill Lynch and Bear Stearns.
Florian Schmidt, who was head of DCM at SC Lowy,
recently left to start his own consultancy firm. BLACKROCK has hired Kimberly Kim as head of its
financial institutions group for Asia Pacific, a newly
created position.
Based in Hong Kong, Kim will report to Andrew
Landman, head of client business for APAC,
and David Lomas, head of the global financial
institutions group. She is due to start in April.
Kim joins from Deutsche Asset Management,
where she was most recently head of the globalclient group for Hong Kong and regional head of
insurance coverage for APAC ex-Japan. Alan Butterfield has joined Australian fintech
firm FC CAPITAL in Sydney as head of the credit
opportunities fund.
FC Capita offers commercial lending and
investment banking services, as well as a range
of technology-driven products focussed on small
to medium-sized enterprises in Australia and
elsewhere.
Butterfield, an experienced leveraged-finance
banker, was managing director of boutique
corporate advisory firm Buttress Investments
for close to four years after leaving GE Capital in- At GE Capital, he was head of leveraged and
sponsor finance for Australia and New Zealand.
Mitsubishi UFJ Financial Group has reshuffled
its investment banking division, promoting Saburo
Araki to president and CEO of MITSUBISHI UFJ
SECURITIES HOLDINGS.
Araki has also been made president and CEO of
Mitsubishi UFJ Morgan Stanley Securities, the
majority-owned securities joint venture with the
US bank.
MUFG also has another securities JV with Morgan
Stanley, Morgan Stanley MUFG Securities, which
the US bank controls. The changes at the other JV
have no impact on it.
Araki, 60, is an MUFG lifer, having joined