DBS is considering a listing of its international money transfer platform DBS Remit.

Southeast Asia's largest bank is considering placing DBS Remit into a separate entity and potentially listing it, DBS said in a filing to SGX Monday. That was in written responses to questions submitted by shareholders ahead of the annual general meeting (AGM) scheduled for 31 March.

«[We] have not fully formed our thoughts yet,» on whether to list DBS Remit, DBS said in response to a shareholder question about whether there would be a listing on SGX in the near future.

«Significant opportunity»

«The payment space is a significant opportunity, and we see a lot of interest to white label the platform. Three partner banks have already gone live and there are another two in discussion to join,» DBS said as part of its answer.

DBS Remit advertises itself as zero-fee same-day transfers, with some tracking capabilities; it offers money transfers to more than 50 counties via its digibank services.

In the 2021 annual report published this month, DBS said DBS Remit posted a 24 percent volume increase for the year, coming after what the 2020 annual report called «exceptional growth,» with volumes rising 38 percent.

Valuation of $7 billion?

The idea of listing DBS Remit was previously floated in the earnings conference call for the results for the second quarter of 2021, in August. In that call, DBS CEO Piyush Gupta said the profitability of DBS Remit was «massive,» adding around S$60 million to S$70 million ($44 million to $51 million) to the bottom line. 

«If I could unbundle the business, there's no reason in my mind why it should not get a valuation of anything of S$5 billion-S$10 billion [$3.68 billion to $7.35 billion]. It's hidden inside DBS. Our market cap is S$55 billion,» Gupta said at the time. «If I could spin it out into a separate entity, and then get some SoftBank kind of investor, maybe somebody starts valuing the business,» Gupta said.

Importance of Remittances

Within Asia, remittances are hugely important, particularly in poverty reduction. According to the Asian Development Bank (ADB), Asia received $315 billion in remittances in 2019, making it the largest remittance-receiving region. Remittances can make up a huge portion of the economy for some regional countries. For example, nearly 40 percent of gross domestic product (GDP) in Tonga in 2020 was from remittances, and nearly 10 percent of GDP in the Philippines in 2020, and 6.3 percent in Vietnam, according to World Bank data.

Earlier this month, DBS said it tied up with BRAC Bank, one of Bangladesh’s largest banks, to allow DBS/POSB customers in Singapore to remit funds to BRAC Bank’s branches and agent banking outlets, as well as any bank account in Bangladesh, using the DBS Remit Service. POSB, formerly the Post Office Savings Bank, is part of DBS. By the end of this year, customers will be able to use DBS Remit to transfer funds to Bangladesh’s leading mobile wallet bKash, a subsidiary of BRAC Bank, which is used by around 22 percent of Bangladeshi adults, DBS said in a press release earlier this month. DBS noted more than 200,000 Bangladeshi migrants work in Singapore. Remittances made up around 6.7 percent of GDP in Bangladesh in 2020, the World Bank data show.

In September 2020, DBS Remit’s platform tied up with Japan’s Seven Bank, citing an increasing foreign resident population in Japan.

This item was originally published on «Shenton Wire».