Singapore’s GIC says able to bail out another bank

30 Jan 08

The Government of Singapore Investment Corporation (GIC), fresh from multi-billion-dollar capital injections into troubled global financial institutions, has the capacity for an additional bailout, a report said Wednesday.

“We will look at any deal that is shown to us. We have a duty to do so. We would still have the capacity if we find it worthwhile to invest,” The Business Times quoted Tony Tan, GIC’s deputy chairman and executive director, as saying.

Earlier this month GIC said it would invest 6.88 billion US dollars in US banking giant Citigroup, whose finances have been battered by a US housing slump.

That deal came a little more than a month after GIC said it would pump almost 10 billion dollars into Swiss bank UBS, another victim of a crisis in the United States subprime, or higher-risk, mortgage sector.

Whether a similar deal would be as large “is a matter to be decided,” the newspaper quoted Tan as saying.

GIC, established in 1981 to manage Singapore’s foreign reserves, says it manages “well above” 100 billion dollars.

Analysts say it could be as much as 300 billion or more, a figure which places GIC among the largest sovereign wealth funds in the world, according to an October report by Citigroup Global Markets Inc.

Sovereign wealth funds are a form of government-created investment vehicle whose newfound market muscle has led to concerns in recipient countries over national security issues and a lack of transparency by the funds.

Singapore’s founding father Lee Kuan Yew, who holds a cabinet position as Minister Mentor, is the chairman of GIC.

Lee said recently that sovereign wealth funds from Singapore are no threat to the economies of Western nations, and are relatively small.

GIC has been a traditionally secretive organisation but GIC executives have recently given a series of press interviews. Tan was quoted on Monday as saying the company plans to disclose more about its operations.

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