Asia’s largest sovereign wealth fund (SWF) is poised to exploit shattered share prices around the world and may be planning a buying spree of European and Wall Street banking titans.

Lee Kuan Yew, the Chairman of the Government of Singapore Investment Corporation (GIC) and former prime minister, told reporters that the giant fund had plenty of capital with which to increase its investments in major global banking names, and would do so if the opportunity arose.

The comments sparked speculation on Asian trading floors that the fund might be looking to build a stake in Deutsche Bank. GIC has already emerged as a significant stakeholder in two of the biggest casualties of the US subprime mortgage and credit crisis: Citigroup and UBS.

Between December and January, the notoriously secretive Singaporean fund poured a combined $18 billion into those two financial houses, as other investors savaged the stocks. Its equally opaque sister fund, Temasek, sank a more modest $5 billion into Merrill Lynch at the height of the crisis.

Citigroup is now seeking a further $3 billion in fresh capital.

Mr Lee, the father of the current Prime Minister, said: “If there are other banks of the quality of the two that we bought into, with the promise and the capabilities and inherent capabilities to recover, we have got the liquidity to meet it, to make such an investment.”

There is mounting domestic pressure on both the GIC and Temasek to justify their massive bets on the European and US banking sector – wagers that have so far generated substantial losses.

Although the investments in the banks by Singapore’s two SWFs were highly welcome at a point where the entire credit system seemed in danger of collapse, the secretive nature of the funds has also left them open to criticism overseas.

In March, senior Temasek executives appeared before a subcommittee of the US House of Representatives in an effort to calm an increasingly nervous US political establishment’s concerns over the fund’s ambitions.

Mr Lee was quick to refer to the GIC’s long term intentions with its investments, stressing that its performance measures were taken over many years.

“We are buying something that we intend to keep for the next two to three decades and grow with them", he said, “will there be another Swiss bank like UBS for wealth management? I doubt it, we doubt it, that is why we invested in it.”

Despite his faith in UBS, both GIC and Temasek have seen the value of their stakes in UBS, Citigroup and Merrill plummet since they were bought. Shares in UBS have been a particular disappointment, having fallen 35% since GIC announced plans to buy mandatory convertible notes.

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