UOB suspends loans, DBS calls for caution
UNITED Overseas Bank , Singapore's No. 3 lender, became the first bank in the city state to suspend its loans programme for London properties in the wake of uncertainties caused by Britain's vote to leave the European Union.
As Brexit spooked global markets and pushed the pound to multi-year lows, other Singaporean banks are also advising clients about risks such as currency losses even though they have not followed UOB's move.
"We will temporarily stop receiving foreign property loan applications for London properties," a UOB spokesman said in an e-mail message.
"As the aftermath of the (British) referendum is still unfolding and given the uncertainties, we need to ensure our customers are cautious with their London property investments."
The Singapore dollar has gained 10 per cent against the British pound since the referendum, eroding the value of assets held in Britain.
Other risks for Singaporean banks have been exacerbated in recent months by an economic slowdown in Asia and rising bad debts in energy-related industries.
Moody's Investors Service yesterday revised the outlook on Singapore banks to negative from stable.
UOB's 2015 result showed over 90 per cent of its loans were to customers in Singapore, Malaysia, Thailand, Indonesia and Greater China.
Singapore's biggest lender, DBS Group Holdings, said it continued to provide financing for property purchases in London but was advising its customers to be cautious.
"For customers interested in buying properties in London, we would advise them to assess the situation carefully before committing to their purchases as there could be potential foreign exchange and sovereign risks," Tok Geok Peng, executive director of secured lending, consumer banking group (Singapore) at DBS Bank, said in an e-mail message.