Asking the Wrong Question About Genting HK Unsecured Loans
YOUR SAYS | “Why are banks so generous in granting unsecured loans to large corporations? »
Anwar: Why did government-linked banks loan billions to a gaming company?
Why didn’t Anwar ban local banks from lending to Genting, asks Zafrul
Smart voter: Genting Group is a diverse group of businesses ranging from entertainment to real estate. The company has built its fortune on these ventures. However, like many others, he fell victim to the global Covid-19 pandemic.
Its cruise business was particularly affected. This has already been well reported in the media, especially on their decision to withdraw from a joint venture in Germany.
Business is about taking risks. You gain some, you lose some. Bankers have lined up to strike deals with Genting because they are cash-rich and reliable.
A bad politician shoots from the hip. There are many on both sides. Opposition leader Anwar Ibrahim is expected to consider early retirement as he is no longer relevant in the current environment.
Betul Malu Bukan Maluapa: Anwar, which is so surprising for the three banks – Maybank, CIMB and RHB – to provide US$600 million (RM2.5 billion) in unsecured loans to Genting Hong Kong as its division, Genting Cruise Lines , owns luxury cruise ships and is a true commercial enterprise.
The Genting name carries weight but sadly, like all global leisure businesses, they have been crippled by the Covid-19 pandemic.
Karnac: Yes, banks grant unsecured loans all the time based on certain risk assessment criteria. My concern is really how Genting HK was sufficiently – apparently – isolated from the Genting group in general.
And if they were, then on what basis were the loans granted? There is no real connection with the Genting group in general, except through the direct and indirect interest of an individual shareholder.
The Wakandan: Indeed, a prudent man would want his money to be secure. It’s just decent.
There are a lot of idiots here who support huge unsecured loans given to borrowers in the name of doing business. And they kind of say, in business “you win some, you lose some”.
So they don’t blame Finance Minister Tengku Zafrul Abdul Aziz because these unsecured loans were a norm, not a rare practice. They are totally okay with the loss of huge sums of money.
Now, those who don’t want such bankers to handle their money and want their money to be safe, please raise your hands.
Omissions R Dishonest: Zafrul avoids the real question – why were the loans unsecured?
For such huge sums, some security should be obtained. No bank would or should take such risks.
MRS: Zafrul will not dare to address the inconvenient fact of unsecured loans. If my knowledge of the industry serves me well, “unsecured” is only possible after weighing other “considerations”.
“You help me, I help you” is one of the unwritten rules of ‘ketuananbanking. Ask any banker.
Malaysia Bharu: “Zafrul also said unsecured lending was not unusual and banks had the freedom to make such loans based on their risk appetite.”
“Zafrul said that despite Genting Hong Kong’s failure, the banks involved and the Malaysian banking sector in general had strong resilience to face the challenges.”
The finance minister’s assertion that despite the losses on unsecured loans our banks are strong is a loophole in fixing a serious flaw in the banking industry.
Banks that are so generous in parting with people’s money, to businesses that may include rogue businesses and fraudsters, survive losses by imposing harsh terms and punitive conditions on secured loan borrowers, especially M40s and B40 (middle and lower 40%) customers who rely on them for home, car, personal, and credit card loans.
Banks insist on locking everything up as collateral and charge exorbitant interest rates and penalties for the slightest delay in repayment.
They are quick to fetch securities in case of default and even to the extent of foreclosures. Some also use the services of debt collectors who constantly stalk and harass defaulters.
This is probably how generous banks are in providing unsecured loans to large corporations, and as Zafrul argues, “despite strong resilience in the face of challenges”.
As long as banks are free to grant unsecured loans to certain customers, their victims are ordinary borrowers whose “balls” are blocked by paltry consumer loans.
Vijay 47: Zafrul mentioned two points that should be of great comfort.
First, in multiracial Malaysia, the Islamic banking industry was progressive enough to be able to differentiate Syariah-compliant assets from conventional assets.
And secondly, that “if the Minister of Finance or the shareholders were to interfere in the day-to-day business of banks in Malaysia, it would clearly be wrong from a governance and administrative point of view”.
These two statements would generally earn about two sen of credibility in the open financial market, even if they weren’t accompanied by the now-accepted claim that “my brother did it.”
As everyone knows, the finance minister’s laissez-faire assurance comes only in lofty rhetoric and never in practice.
That said, we still have to wonder why Anwar seems so concerned that loans have been made by Malaysian GLC banks to Hong Kong gambling dens.
If his concern centered on granting such loans to offshore banks, or especially without any collateral, that would have been understandable and perhaps commendable. But no, he was upset because the recipient was from the gaming industry.
Would the generosity of the three banks have been in order if it had been granted to institutions other than Genting?
Anwar, it seems your Abim (Muslim Youth Movement Malaysia) days have never really left you. Again, your private international banking consultant might be PAS chief Abdul Hadi Awang.
Dragon Boat: In finance, unsecured debt refers to any type of debt or general obligation that is not protected by a guarantor, or secured by a lien on specific assets of the borrower in the event of bankruptcy or liquidation or non-compliance with the reimbursement conditions.
The question is not to give loans to a gambling company. The question is why give “unsecured” loans to a gambling company? Zafrul avoids the question.
The above is a selection of comments posted by Malaysiakini the subscribers. Only paying subscribers can post comments. Over the past year, Malaysians have posted over 100,000 comments. Join Malaysiakini community and help set the news agenda. Subscribe now.
These comments are compiled to reflect the views of Malaysiakini subscribers on matters of public interest. Malaysiakini does not intend to present these views as facts.