Singtel’s stock has skyrocketed after the company was licensed with Grab to provide digital banking services in Singapore.
The multinational telco saw the share price rise by no less than 11%. At 11:59 a.m. December 7, the shares stood at S $ 2.45 each. It’s the biggest jump since October 2008.
At the end of last week, the Monetary Authority of Singapore awarded a digital banking license to the Grab / Singtel combination. Internet giant Sea Group also received a license. Shortly afterwards, Grab and Singtel appointed Charles Wong as CEO of their digital bank. Wong brings more than 20 years of financial services experience and spent nearly five years as Head of Retail Banking at Citigroup in Singapore. The group now says they want to assemble a team of 200 people for the digital bank by the end of 2021. Grab and Singtel announced their joint offer in December last year, with Grab having a 60% stake in the consortium, while Singtel would have a 40% stake, according to a previous statement.
The consortium positioned their bid around the financial needs of digital consumers and small and medium-sized businesses with limited access to credit.
In October this year, it was reported that Singtel would have to put a total of S $ 600 million (US $ 441 million) into the joint venture with Grab over the next few years.
DBS analyst Sachin Mittal says the consortium has the potential to control 2% to 4% of the Singapore consumer market, excluding mortgages, by 2025. He also believes that the digibank could break even in four to five years.