DBS took a further step towards extending its regional franchise this week by cementing a strategic alliance with Korea Export-Import Bank (Kexim).
On Monday, Singapore’s leading financial group and the Korean state-owned policy bank signed a memorandum of understanding (MoU) that aims to bind them to closer cooperation in infrastructure and project financing.
It is the first time that DBS has signed an MoU with a foreign export-import bank. The objective is to enhance the service it offers to Korean corporate clients.
The strategic alliance means that DBS and Kexim will exchange information, cooperate on infrastructure projects and second staff to one another. The idea is that DBS will work more closely with Kexim and therefore be better equipped to serve its Korean customers who are keen to do business within Asia, and also its Asian customers who buy goods from and partner with Korean companies.
“We have increasingly seen Korean companies investing in and exporting to markets in Asia,” said Lim Wee Seng, head of project finance at DBS. “In the area of infrastructure development in Asia, in particular, a significant number of Korean companies are involved as engineering, procurement and construction contractors, equipment suppliers as well as asset developers. Kexim’s strong support and deep involvement has been crucial in ensuring the successful funding and implementation [for many] of these projects.”
Kexim was set up in 1976 to provide export credit and guarantee programmes to support Korean firms conducting overseas business. Its activities include export loans, trade finance, and guarantee programmes to help its clients compete in global markets.
Closer cooperation with Kexim through the MoU will help strengthen relationships with DBS’s existing Korean corporate customers. At the same time, the withdrawal by some European banks from project finance lending recently has provided an opportunity for Asian banks to expand their regional franchise, according to Subash Narayanan, senior vice-president for project finance at DBS.
“Our general focus will be on advising, structuring and leading syndicated loans for infrastructure projects, although we will also look at capital investment proposals by companies requiring long-term funding,” he said.
“Initially we expect to be active in the power sector, especially in Southeast Asian countries such as Indonesia and Vietnam. Oil-and-gas and resources projects also have great potential,” he added.
“We expect to have greater opportunities to provide co-financing for project finance transactions as co-arrangers and co-advisors.,” said Ki-Sub Nam, senior executive director at Kexim.
Clearly DBS, which is growing its regional presence each year, can help Korea’s overseas ambitions too.
As Narayanan pointed out: “Korean domestic banks are not active providers of the long-term US dollar funding that Korean companies need for project finance in overseas markets. DBS can fill that gap in conjunction with Kexim which provides guarantees to lenders as well as direct funding.”
