Singtel share price rises following Grab digital banking union

Singtel share price rallied to a three-week high on Monday morning, after it announced plans to partner up with Grab to bid for a digital banking licence.

Singapore Telecommunications Limited (Singtel) and Singapore-based internet company Grab have joined forces to bid for a digital banking licence.

Both companies hope to set up a full-service digital bank with an ‘aim to cater to the needs of digital-first customers, who have come to expect greater convenience and personalisation’, according to a joint statement.

It added that the proposed online-only bank will also provide a wide range of financial products and services to small and medium-sized enterprises, ‘which cite lack of access to credit as a key pain point’.

Singtel share price rose to a three-week high of S$3.40 per share as of Monday 30 December at 11.25am, following the announcement.

Grab, which is fully privatised, will hold a 60% majority stake in the consortium, and Singtel with the remaining 40%.

Digital full bank licence

This move comes after the Monetary Authority of Singapore (MAS) announced in June plans to transform the Singapore banking sector by opening it up to non-financial institutions. It would do so by issuing up to five virtual bank licences – two digital full bank licences and three wholesale bank licences.

A digital full bank licence, which Grab and Singtel have applied for, will allow the planned entity to provide a wide range of financial services, while also accepting monetary deposits from both retail and institutional customers.

Under the scheme, the approved licensees will commence operations on a limited basis for the first one to two years, with a minimum paid-up capital of S$15 million, an aggregate deposit ceiling of S$50 million, as well as deposits per individual capped at S$75,000.

Licensees will then become fully operational - in which all deposit caps are lifted - from the third year on, once a minimum paid-up capital amount of S$1.5 billion is reached.

Grab currently operates an e-payment platform called the GrabPay, while Singtel also has a similar service called Dash.

Both companies will know if their application is successful by the middle of next year.

Other companies that have expressed their interest to bid for licences include Singapore gaming technology company Razer, and Singapore-based digital payment gateway FOMO Pay.

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