In yet another sign of the far-reaching consequences of Brexit, United Overseas Bank (UOB), Singapore’s No. 3 lender, became the first bank in the city-state to suspend its loans programme for London properties.
According to a report by Reuters, the move was made in the wake of uncertainties brought about by Britain’s decision to leave the European Union.
While other Singapore-based banks have not followed UOB’s lead, they have been actively cautioning clients about prevalent currency risks, given that Brexit has spooked the market and pushed the British pound to multi-year lows.
“We will temporarily stop receiving foreign property loan applications for London properties,” a UOB spokeswoman was quoted as saying.
“As the aftermath of the UK referendum is still unfolding and given the uncertainties, we need to ensure our customers are cautious with their London property investments.”
Meanwhile, the Singapore dollar gained some 10 per cent against the pound in the aftermath of 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.
Property consultants say data on the number of properties purchased by Singaporeans in the United Kingdom have not been tracked that closely. Banks do not disclose lending data for UK property purchases.
UOB’s 2015 result showed over 90 per cent of its loans were to customers in Singapore, Malaysia, Thailand, Indonesia and Greater China.
However, Singapore’s biggest lender DBS Group Holdings has said that it will continue to provide financing for property purchases in London, though it is advising caution.
“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,” said the bank’s executive director of secured lending Tok Geok Peng.
UOB runs an international property loans programme that also covers properties in Australia, Japan, Thailand, Malaysia and Singapore.