Singapore banks are flushed with deposits with few options to deploy them amid a tepid lending environment. The city-state’s central bank is one avenue.
The issue was highlighted in May when DBS Group Holdings Ltd. Chief Executive Officer Piyush Gupta said during an analyst call that the bank had lent the Monetary Authority of Singapore S$30 billion as it is “not finding enough opportunities to put the money to work.”
“Banks do not actively gather customer deposits just to park them at the central bank as a business strategy,” said Willie Tanoto, a director in Fitch Ratings’ financial institutions team. It’s likely that some banks have seen more deposit inflows than they can immediately deploy to suitable risk-adjusted asset opportunities, he added.
At rival United Overseas Bank Ltd., lending to MAS is one of the bank’s deployment options for surplus cash. Its non-restricted balances with central banks jumped 40% year-on-year to S$42.3 billion last year. Oversea-Chinese Banking Corp.’s money market placements and reverse repos with central banks was S$28.4 billion in 2022, up from S$20.3 billion a year ago.
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