DBS Group Holdings Ltd. is considering raising its stake in an unlisted Chinese bank as Southeast Asia’s biggest lender looks to take advantage of growth opportunities across the Greater China region despite heightened geopolitical tensions.
The Singapore-based lender is keen to explore increasing its holdings of Shenzhen Rural Commercial Bank either before or after an expected initial public offering in the next few years, Chief Executive Officer Piyush Gupta said Thursday during a briefing in Taiwan, without elaborating on the size of its planned investment. DBS also expects to see accelerated growth in Taiwan after its acquisition of Citigroup Inc.’s retail banking business there, Gupta added.
A higher level of perceived risk has surrounded growth opportunities in the Greater China region as increased Chinese threats against Taiwan have raised geopolitical tensions between Beijing and Washington over the past year. This has triggered many Wall Street firms to reassess the risks of doing business in the region.
“There will be tensions, obviously,” but it would never escalate to a war as “the world is too interconnected and global trade is too intertwined,” Gupta said. He added that even assuming the worst, domestic finances and banking in Taiwan will remain “resilient.”
In China, DBS bought a 13% stake in the Shenzhen bank for $1.1 billion in 2021 as part of a long-standing goal of growing in large emerging markets. Further sway over the bank would allow DBS to grow its business more aggressively in Asia’s largest economy.
Shenzhen bank stake gives DBS greater access to China’s Greater Bay Area and the region’s supply chain, according to Gupta. “We think that this area will become the economic powerhouse in decades to come.”
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DBS received regulatory approval at the end of last year to buy Citigroup’s Taiwan consumer business. The acquisition will accelerate DBS’s growth in Taiwan by at least 10 years and will make it the island’s biggest foreign bank by assets, according to the bank’s presentation. With 29 branches, DBS expects its credit card and unsecured credit loan business, wealth management assets and current deposits to all surge there.
The acquisition will be completed this year, Lim Him Chuan, the bank’s Taiwan head, said at Thursday’s briefing.
