Singapore banking system has 'insignificant' exposure to Evergrande: MAS

SINGAPORE (THE BUSINESS TIMES) – Singapore’s banking system has “insignificant” exposure to China Evergrande Group, and less than 1 per cent of its non-bank direct lending is exposed to China’s property sector, a parliamentary reply this week showed.

Exposures to Singapore property developers with operations in China are a further 2.5 per cent of loans to non-bank customers. But this includes all loans to these developers, not just loans related to their Chinese operations, the reply by Mr Tharman Shanmugaratnam, Senior Minister and chairman of the Monetary Authority of Singapore (MAS), showed.

As for Singapore developers with operations in China, MAS estimates that about 30 per cent of their revenues in aggregate are derived from China. However, their median interest cover ratio – that is, the ratio of earnings to interest expenses – is in aggregate more than three times.

That said, while the Chinese authorities have thus far maintained stability in their financial system, the slowdown in China’s real estate sector could dampen its GDP growth.

“It is difficult to estimate how significant this will be, and hence how adverse its impact will be on regional economic growth,” the parliamentary reply showed.

“MAS and MTI are keeping a close watch on any indirect or spillover effects on the Singapore economy arising from developments in China.”

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