A massive banking crisis is brewing in Singapore, says Swiss billionaire Zulauf

Singapore Business Review – 9 hours ago

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Ricky L • a second agoRemove

China GDP is about US$13 to 20 trillion every year.
China foreign reserve is US$3.65 trillion.

China does not borrow and does not have budget deficit year after year.

In addition, China is say to be growing 6 to 6.9%.

So how does China experience a massive capital outflow with trillion dollar Economy - even though China is experience some difficulties due to Economic restructuring which will take time to stabilise.

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Ricky L • a second agoRemove

Non-performing Chinese assets will rise.
Singapore banks are protected from China’s slowdown because of their selective lending to mainland corporates, according to a report by Fitch.
Fitch believes that the three largest banks’ credit profiles will remain sound despite a more challenging operating environment, as they are supported by strong loss-absorption cushions in the form of healthy pre-provision profitability and capital adequacy, together with policy buffers introduced by proactive and prudent regulators.
“Banks’ selective lending in China – focusing on SOEs, large corporates and short-term trade loans – is another protection,” Fitch said.
However, Fitch warns that the average non-performing asset (NPA) ratio of the three Singapore banks will rise modestly to 1.1% by end-2015 and 1.2% by end-2016.
“A key risk lies in banks’ exposure to the commodity sector, which has been hit by low commodity prices. We expect modest risk from this sector, given Singapore banks’ diversified loan portfolios and steady asset-quality track record,” said the report.

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Ricky L • a second agoRemove

“Banks’ selective lending in China – focusing on SOEs, large corporates and short-term trade loans – is another protection,” Fitch said.

With Singapore banks lending to SOEs (guaranteed by the China Government - with strong financial reserve), large corporates of short-term trade loans - which will be repaid in short-term --- how will the Singapore banks exposed to capital outflow when China GDP and foreign reserves as well as GDP of trillion dollars still growing?

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Ricky L • a second agoRemove

OCBC and UOB have some exposure to gas and oil sector with higher NPLs.
DBS is exposed to SMEs with higher NPLs.

However, the banks will still have strong capital buffers, it added.
"As of September 2015, all three banks had common equity Tier 1 ratios well above regulatory minimum of 9 per cent, which includes 2.5 per cent capital conservation buffer and 2 per cent buffer for domestic systemically important banks," said Moody's.

So despite higher exposure to Greater China - but it is not the doomsday scenario that this person is talking about.

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Ricky L • a second agoRemove

If based on what this person say - it means a total collapse of China SOEs, large corporates, China GDP drop from US$20 trillion to below a trillion, China foreign reserves drop below a trillion ----- is this scenarios realistic?

I think the above doomsday of China Economy - is not possible - as describe by this chap.

I think the above doomsday of China Economy - is not possible - as describe by this chap.

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Ricky L • a second agoRemove

If the above doomsday happen in China - then US, Europe, Asia Pac, World Economy - will all collapse because they are highly inter-linked.

 

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Ricky L • a second agoRemove

Just laying to rest in response to this chap's doomsday scenario :-

LOCAL BANKS STAND ON STRONG FUNDAMENTALS: RECRUITING FIRMS
Top recruiting firms said the three local banks stand on strong fundamentals and are not expected to resort to the drastic staff reduction measures taken by many big global lenders. OCBC, DBS and UOB are ranked by financial publisher Bloomberg Markets among the top 10 of the strongest banks in the world, underlining the hefty capital buffers and sound risk management of the lenders.

“For the local banks, there is no slowing down. Foreign banks are, however, holding back to see how the China impact pans out on Asia. There will an impact on Singapore given its high-cost structure despite being an ideal hub location with best of infrastructure capabilities. Bonuses this year, on an average across the industry, may be a third less than what was promised,” said Mr Grant Torrens, business director at Hays Singapore.

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