SINGAPORE - Singapore banks are beefing up their investment banking teams to capitalise on a sector that is defying slower economic growth and volatile share markets.
The lending business is also getting tougher for the three local players, as loans growth continues to moderate and interest margins remain compressed.
But investment banking has gained significant traction in the past year, even though fees contribute only about 2 per cent to 3 per cent to overall revenue.
A Credit Suisse report said DBS remains the dominant player in the capital markets sector while United Overseas Bank (UOB) and OCBC Bank are catching up fast in terms of market share and investment banking fee income.
DBS accounts for about 36 per cent of the debt capital market sector. OCBC has about 11 per cent and UOB about 7 per cent.
Comparing the debt and equity markets, DBS' head of fixed income Clifford Lee said: "The equity market is the more established of the two across Asia, and investors are more familiar with it."
"On the debt side, it is the younger of the two cousins, so while it seems as if debt is growing faster now, in reality, the debt market is trying to catch up with the equity market. With volatility in the equity market, and with investors becoming more familiar with debt, it gives us a chance to do more deals."
Local banks have also grabbed a bigger share of intra-regional deals and gained from the pullback of some big European banks.
In September, OCBC was the joint lead manager and joint bookrunner for Hong Kong-listed Wing Tai Properties' $170 million bond issuance. DBS was also joint bookrunner for the dual initial public offering of IHH Healthcare.
Mr Gan Kok Kim, OCBC's head of group investment banking, said that since the global financial crisis, companies have required a more holistic relationship with their banks.