[SINGAPORE] DBS Group' s top executive welcomes the increased regulatory scrutiny of financial technology companies in China and elsewhere in Asia, saying it will create fairer competition with banks that have been subject to stricter oversight.

 

" Over time you will start getting a more level playing field, and you' ll start getting a proportionate and even regulatory response to all participants in the market," chief executive officer Piyush Gupta said in an interview with Bloomberg Television on Thursday.

 

Mr Gupta spoke after being asked for his view on the shelving of Ant Group' s initial public offering (IPO) in China as regulators seek to level competition between fintech giants and traditional banks.

 

" Our view has been in the past that many technology companies have been able to benefit from the arbitrage of not having the same regulatory regime and supervision overhead that banks do," Mr Gupta said. " And so as we get to that stage that' s actually helpful to us."

 

While declining to comment on his plan to merge the bank' s India unit with struggling Lakshmi Vilas Bank due to pending regulatory approval, Mr Gupta said such a deal won' t impact DBS' s dividend payment. China, India and Indonesia are key regional markets the bank is expanding into, he said.

[SINGAPORE] DBS Bank has applied to the High Court to wind up Novena Global Healthcare Pte, which is believed to have owed the bank millions of dollars.

 

The firm will be put into liquidation if the High Court grants the application next month.

 

Its parent Novena Global Healthcare Group, incorporated in the Cayman Islands by Singaporean cousins Terence, 42 and Nelson Loh, 40, are being investigated by the police for allegedly using unauthorised signatures of accounting firm Ernst & Young (EY) on its financial statements.

 

Police declined to comment as investigations are still ongoing.

 

A subsidiary, Novena Global Healthcare Pte Ltd, which was incorporated in 2016, had also breached Accounting and Corporate Regulatory Authority (Acra) regulations by failing to file its annual return.

 

The return has still not been filed despite warnings and enforcement action by Acra.

 

An Acra spokesman told The Straits Times on Thursday that the authority will be taking further enforcement action against Novena Global Healthcare and Novena Life Sciences which was also co-founded by the Loh cousins.

 

This could lead to the companies and/or their directors prosecuted in court.

 

Acra also found that six more entities owned by the Loh cousins had not filed annual returns. Enforcement actions against them are on-going, the spokesman added.

 

The entities include Aesthetic Medical Partners and Rock Star Advisers.

 

The cousins made news in August this year for their  £ 280 million (S$492 million) takeover bid for English Premier League club Newcastle United.

 

This bid was made under the Bellagraph Nova Group (BN Group), which they founded with Chinese entrepreneur Evangeline Shen, 32, in July.

 

They have since parted ways.

 

Last month (Oct), Mr Terence Loh issued a statement announcing a " separation agreement" entered into between the cousins and former business partners.

 

Mr Nelson Loh will transfer all the shares he owns in three corporate entities - Cayman Islands-registered Novena Global Healthcare Group and all its subsidiaries, Singapore-registered Dorr Global Healthcare International, and Singapore-registered Rock Star Advisors - to Mr Terence Loh for S$1. He will also resign as director of these three entities.

 

The ST reported previously that Acra searches showed Citibank registered charges on Novena Aptus and Novena Novaptus on Feb 24 this year, a month after the two companies were incorporated by the Loh cousins.

 

A charge is a form of security interest usually taken by a lender or creditor - " chargee" - to secure repayment of a loan.

 

Sources with knowledge of the loans said that Citibank lent the Loh cousins several million dollars.

 

Citibank declined comment.

 

DBS Group Research has upgraded its recommendation on real estate services provider Apac Realty, which owns ERA Realty Network, to " buy" from " hold" . The research team cited better-than-expected property transaction activities and " attractive valuations" .

 

It has also raised its target price (TP) on the counter to S$0.53, from S$0.40 previously. The revised TP represents a 39 per cent upside from Apac Realty' s Friday close of S$0.38.

 

" The property market was resilient amid the Covid-19 pandemic. Transaction activities in the various segments only saw a slight decrease of between 1.2 per cent and 5.2 per cent year on year in 9M 2020," wrote DBS analyst Ling Lee Keng in a research note on Monday.

 

DBS now expects the overall market transaction value to ease 2.4 per cent in FY2020, before rebounding 3.4 per cent in FY2021 and 7.9 per cent in FY2022.

 

Despite fewer project launches, supply is still healthy, the research team noted. ERA has launched 21 projects from January to October this year, versus 43 projects in 2019, DBS said, adding that there are 21 more projects slated for launch during the rest of this year and in FY2021.

 

Apac Realty holds the ERA regional master franchise rights for 17 countries in the Asia-Pacific.

 

According to Ms Ling, Apac Realty is now trading at an " attractive" 9.4 times price-to-earnings (P/E) ratio for 2020, which is slightly below 1 standard deviation of its five-year average P/E.

 

DBS has also raised its sales assumptions and the earnings forecasts for FY2020 to FY2021 by 22 to 25 per cent.

 

Added Ms Ling: " TP is increased to S$0.53 on higher earnings and valuation peg of 12.4 times P/E on FY21F earnings, average of its five-year P/E, versus 11.4 times at -1 standard deviation previously, as we believe the worst is over."

DBS' S plans for a digital exchange has brought excitement to the niche crypto and digital securities world.

 

Most are hopeful that a reputable bank' s entrance will bring credibility and more adoption of blockchain technology and cryptocurrency.

 

DBS Digital Exchange could be one of the world' s first crypto exchanges backed by a traditional bank, observers said. A Webpage for the DBS Digital Exchange that was accidentally made public briefly in late October said the proposed platform will list the four top cryptocurrencies - Bitcoin, Ether, Ripple and Bitcoin Cash - against multiple fiats. South-east Asia' s largest bank declined further comment, stressing that it' s still seeking approval for these plans.

 

If approved, corporates will be able to raise private capital on the platform from qualified investors by digitising their securities and assets into tradeable tokens. DBS will also offer " institutional-grade" custody solution tailored for safekeeping digital assets. This means the bank will hold onto the unique cryptographic keys for users' digital wallets.

 

Players in the crypto and digital assets expect the DBS Digital Exchange to inject constructive competition into markets. The entrance of one of the region' s largest financial names bodes well for financial innovation in the region, said Alice Chen, co-founder and chief legal officer of InvestaX, a digital securities issuance and investment platform headquartered in Singapore.

 

" Given that DBS has been seen as a frontrunner in digitalisation, its involvement will be regarded as quite a high form of endorsement," she added. Rather than outright competition, Ms Chen thinks this move will drive overall demand. " I don' t think it' s a winner-take-all kind of market."

 

DBS' s move is a sign that digitised securities are increasingly accepted and integrated within traditional finance circles, said Choo Oi Yee, chief commercial officer of homegrown securities token platform iSTOX. " This actually opens up the investible opportunities for individuals, such as by increasing investors' ability to access hedge funds or private equity funds in a fractionalised manner with secondary market liquidity," she noted.

 

As far as tokenised digital securities are concerned, there is sufficient diversity for existing as well as new players to each find their niches.

 

" That is good because security tokens can be so diverse and are difficult to all (be) put in one basket," said Dan Liebau, who founded corporate finance boutique Lightbulb Capital. It has an innovation education arm focusing on fintech and blockchain.

 

Mr Liebau cited, as examples, InvestaX' s focus on real estate, while HGX looks at secondaries of US tech firms.

 

While blockchain technology facilitates the issuance, management and trading of both cryptocurrency and tokenised digital securities, they are two distinct asset classes.

 

Private cryptocurrency are a form of currency that comes in the form of encrypted tokens that are bought, sold and traded independently of a central bank.

 

Digital securities are traditional securities that have been digitally formatted so they can be issued, traded and tracked more efficiently. Equities, debt, funds and asset-backed securities can all be digitised.

 

Alexandre Kech, co-founder of digital-asset custodian Onchain Custodian, said that while digital securities are becoming more widely accepted by traditional financial institutions as " the future of securities" , cryptocurrencies remain controversial. " DBS becoming one of the first banks endorsing bitcoins and other crypto as legitimate assets will contribute greatly to their broader acceptance and mainstream adoption," he felt.

 

Banks in the crypto-play are likely to be subject to a more conservative nature of their internal compliance teams, leaving room for more agile native cryptocurrency players, Mr Kech said, adding: " The profile of customers that DBS will target will often be very different."

 

An archived version of the DBS Digital Exchange' s Webpage states that it only accepts financial institutions and professional market makers as members. Individual investors can only access the exchange via a member, such as the banking group' s securities and derivatives brokerage and its private banking arm.

 

But some are sceptical about a traditional bank' s ability to operate in a space popularised for its ability to eliminate intermediaries such as bankers and lawyers.

 

Zhu Juntao, co-founder of Hodlnaut, a platform that allows users to earn interest on their cryptocurrency deposits, expressed some doubt about DBS getting demand for its custodian services, given that there already are prominent players in the space. " Banks are generally slower, less adaptable and have to comply with a lot more regulations. In this case, I also think DBS may have lost out on the first-mover advantages and does not have sufficient network effects," he said.

 

Andrew Leelarthaepin, vice-president for bitcoin exchange Bitstamp' s Asia-Pacific operations, pointed out that DBS is proposing a crypto-exchange that operates only from Monday to Friday, according to the Webpage that has now been taken down. " That was a bit strange since cryptocurrencies trade round the clock across the globe," he noted.

 

Still, Mr Leelarthaepin, like many other observers, expects DBS' s move to prompt other financial institutions to follow, presenting opportunities for collaboration.

 

Likewise, Yusho Liu, co-founder of local crypto exchange Coinhako, said: " We are likely to see some sort of FOMO (' fear of missing out' ) in the financial space and more ' big finance brands' releasing their versions of digital asset services in the coming months." He noted that incumbent financial businesses may have greater market presence, but fintechs in the digital assets space have the technological know-how, and " tend to be more agile" in implementing solutions.

 

Banks around the world have been adopting blockchain technology.

 

Last month, JPMorgan created a new business to house its blockchain and digital currency efforts. The bank' s digital currency JPM Coin was also used commercially for the first time by a large technology client to send payments around the world.

 

HSBC in 2019 announced plans to shift some US$20 billion worth of assets to a new blockchain-based custody platform.

 

And in July, regulators in the United States began allowing any nationally chartered bank to provide custody services for cryptocurrencies, clearing the way for banks to hold digital assets for their clients.