OCBC, Keppel, Validus tie-up closes door on digital bank bid

Singapore

A PROMINENT consortium comprising OCBC, Validus Capital, Keppel Corporation and Vertex Ventures has decided against applying for a digital wholesale banking licence, BT understands.

The late breakdown in talks, BT understands, comes amid Keppel's ongoing strategic review of its core operations, with Temasek Holdings due to take control of the conglomerate via a partial offer.

OCBC, Keppel, and Validus declined comment when contacted.

OCBC has historically been active in the small-and-medium-sized enterprise (SME) lending space. The bank is also active in the Asean region, with its key markets in the region being Indonesia, Malaysia, and Singapore.

Meanwhile, Vertex-backed Validus Capital earlier this year raised US$15 million to expand into the region. It is currently in Singapore and Indonesia, with more markets on the way, and has matched more than S$300 million in loans through its platform since it started in 2015.

It was expected that Keppel, as a major offshore-and-marine player, could also refer its smaller vendors to Validus' unique model of lending to SMEs that work with top corporate customers.

Validus works with several large corporates in Singapore, including large shipyards and the country's largest logistics and transport provider, to match the pool of vendors that hold contracts with these blue-chip firms with financing.

These large corporates want to ensure that their small contractors and suppliers have adequate financing to complete projects on schedule. In effect, Validus is looking at the top corporates' risk profile - which tends to be lower than the small vendor supplier - to give the SMEs a lower borrowing rate.

Validus matches funds from accredited and institutional investors on its platform to SMEs that need loans, and earns a fee from matching loans to these small businesses.

The Monetary Authority of Singapore is issuing in 2020 up to five digital banking licences - two full-bank licences that permit retail banking, and three for wholesale banking.

BT had earlier reported in November that OSIM founder Ron Sim's V3 Group is said to have plans to apply for a digital full-bank licence through a consortium with stored-value card operator EZ-Link, property group Far East Organization and Temasek-owned Heliconia Capital.

Standard Chartered had likewise told BT it was exploring a digital bank licence. Razer told BT in mid-December that it has been in talks with "prospective partners" to apply for a full-bank licence, but said the application timeframe was "tight".

Digital banking applications in Singapore close on Tuesday.

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