Singaporean lender DBS Group is set to wind down its Singapore-based Islamic banking joint venture after it failed to achieve economies of scale.

In a filing with the Singapore Exchange, DBS said: "After much consideration, the board of directors of The Islamic Bank of Asia Limited (IB Asia) has unanimously agreed to progressively wind down IB Asia.

"As a separate legal entity, IB Asia is unable to achieve economies of scale."

The bank said that it would now handle Shariah-compliant products such as Islamic bonds or Sukuk directly within its main operations.

The process of winding down the Islamic banking unit is subject to shareholders and regulatory approvals, and expected to be completed within two to three years.