Still, heavy SRT use is unlikely given low risk-weighted asset density, ample capital for modest loan growth and alternative efficient capital tools available. DBS has a larger and diversified corporate book vs. peers, which better suits reference-portfolio SRTs; scale and mature risk infrastructure improve transaction economics.
Singapore banks may only use Significant Risk Transfer (SRT) selectively for capital optimisation, flexibility and portfolio steering, and aggressive use is unlikely, given low risk-weighted assets density, ample capital for modest loan growth and alternative capital tools available. Asian banks use of SRT looks gradual and uneven in the near to medium term.
Singapore banks may use SRT selectively for capital optimisation, flexibility and portfolio steering. As of 3Q2025, their average fully phased-in Common Equity Tier 1 (CET1) ratio is 15%, well above MAS minimal and internal targets, with asset quality among Asia's strongest. SRT transactions transfer possible portfolio credit-loss risk to investors to lower regulatory capital; such arrangements become appealing when regulatory capital requirements substantially exceed actual underlying loan risk.
