Singtel shares soar after securing digibank license alongside Grab

Shares of Singtel jumped after its digital banking venture with Grab was awarded a license to operate in the city-state.

Photo credit: Grab

The multinational telecommunications conglomerate saw its stock rise by as much as 11%. As of 11:59 am today, its shares stood at S$2.45 apiece – it had closed at S$2.34 on Friday last week. This is the biggest jump since October 2008.

Late last week, the Monetary Authority of Singapore awarded digital full bank licenses to the Grab and Singtel consortium, as well as internet giant Sea Group.

Shortly after, Grab and Singtel appointed Charles Wong as the chief executive of their digital bank. Wong brings with him over 20 years of experience in financial services and spent nearly five years as the retail banking head of Citigroup in Singapore.

The group also said they would set up a team of 200 people for the digital bank by the end of 2021.

Grab and Singtel announced their joint bid in December last year, with Grab owning a 60% stake in the consortium entity, while Singtel would hold a 40% stake, according to a previous statement.

The consortium positioned its bid around the financial needs of digital-first consumers as well as small and medium-sized enterprises that face a lack of access to credit.

In October this year, it was reported that Singtel may have to pour over S$600 million (US$441 million) in total into its joint venture with Grab over the course of several years.

DBS analyst Sachin Mittal said that the consortium has the potential to secure 2% to 4% of Singapore’s consumer market by 2025, excluding mortgages. He also believes that the Grab and Singtel digibank may break even in four to five years.