SINGAPORE (Oct 2): Singapore's banking stocks have fallen substantially on concerns about their exposure to commodities, but the risk of falling goods prices is less than expected, Nomura says in a note.

It calculates that the exposure of DBS Group Holdings, Oversea-Chinese Banking Corp. and United Overseas Bank is between 8% and 17% of loans, but the risk to the banks of falling prices and potential loan defaults are actually less than these figures imply because the figures include trade finance loans.

Nomura says trade finance is less risky because they are collateralised, plus, the banks’ loans are spread over several categories of commodity companies and are mostly involved in funding the transportation of commodities rather than the ownership.

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