Zafrul tells how Genting HK got RM2.5bil in unsecured loans

 

Finance minister Tengku Zafrul Aziz gave an assurance that the affected banks can withstand any loss resulting from the loans.  (Bernama pic)

PETALING JAYA: Finance minister Tengku Zafrul Aziz has provided several reasons how failed Genting Hong Kong got RM2.5 billion in unsecured loans from three local banks.

The cruise operator filed for bankruptcy earlier this month, and Singapore’s Straits Times reported on Sunday that Maybank, CIMB and RHB Bank were among some of the company’s chief unsecured creditors, with a combined exposure of US$600 million (RM2.5 billion).

Tengku Zafrul said giving out unsecured loans was not an uncommon thing in the banking sector. Banks could approve unsecured loans based on their risk and credit assessments.

He sought to give an assurance that the affected banks could withstand any loan loss, saying “Malaysia’s banking sector, as a whole, is highly resilient in facing the various challenges of current business operations.”

Tengku Zafrul said the loan approval process was not under the purview of the finance minister, finance ministry or the banks’ shareholders, but by the banks themselves.

“Each bank has a due diligence process and credit assessment by their respective credit committees to assess the ability of prospective borrowers to repay their loans.

“In terms of policy, Bank Negara Malaysia has set guidelines that need to be followed. As long as these banks adhere to the guidelines, they are free to approve loans at their discretion,” he said in a Facebook post.

Tengku Zafrul’s explanation came about after opposition leader Anwar Ibrahim questioned why a gambling company got an unsecured loan so easily.

Anwar also questioned why Permodalan Nasional Berhad (PNB), Khazanah, and the Employees Provident Fund (EPF), which were the largest shareholders of these three banks, allowed the loans to be approved.

However, Tengku Zafrul said shareholders were not involved in the daily operations of the banks.

“I am sure, as a former finance minister, Anwar is aware of the difference between the roles of board members and the company’s management.”

On the question of giving loans to a gambling company, Tengku Zafrul explained that the Malaysian banking system was progressive and it could differentiate between its shariah and commercial assets. - FMT