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THEY SAY | “Why are banks so generous in providing unsecured loans to large corporations?”

Anwar: Why have government-affiliated banks lent billions to gambling companies?

Why didn’t Anwar ban local banks from lending to Genting, Zafrul asks

Smart Voter: Genting Group is a diversified group of companies from entertainment to real estate. The company built its fortune on such deals. However, like many others, it fell victim to the global Covid-19 pandemic.

The cruise business was particularly hard hit. This has already been well reported in the media, especially the decision to withdraw from a joint venture in Germany.

Business is about taking risks. You win something, you lose something. Bankers lined up to do 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 should consider early retirement as he is no longer relevant in today’s context.

Betul Malu Bukan Maluapa: Anwar, which is so surprising for the three banks – Maybank, CIMB and RHB – to give Genting Hong Kong $600 million (RM2.5 billion) in unsecured loans when its Genting Cruise Lines division owns luxury cruise ships and a real commercial enterprise.

The Genting name carries weight but unfortunately like all global leisure businesses they have been paralyzed by the Covid-19 pandemic.

Karnak: Yes, banks are constantly making unsecured loans based on some risk assessment criteria. My concern is really how Genting HK was – apparently – sufficiently sealed off from the Genting group in general.

And if so, on what basis were the loans granted? There is no real connection to the Genting Group in general, except through the direct and indirect involvement of a single shareholder.

The Wakanda: In fact, a prudent man would want his money to be safe. It’s just right.

There are many idiots here supporting huge unsecured loans made to borrowers in the name of doing business. And they say in business ‘you win some, you lose some’.

So you don’t blame Finance Minister Tengku Zafrul Abdul Aziz because such unsecured lending was a norm and not an uncommon practice. You are okay with losing huge amounts of money.

Well, those who don’t want such bankers to manage their money and want their money safe, please raise your hands.

Omissions R Dishonest: Zafrul avoids the real question – why were the loans unsecured?

For such huge sums one should get some security. No bank would or should take such large risks.

MRS: Zafrul won’t dare address the inconvenient fact about unsecured loans. If my industry knowledge is useful to me, “unsecured” is only possible after considering other “objects”.

“You help me, I help you” is one of the unwritten rules in ‘ketuanan‘ Banking. Ask any banker.

Malaysia Bharu: “Zafrul also said that unsecured loans are not uncommon and banks have the freedom to make such loans based on their risk appetite.”

“Zafrul said that despite the bankruptcy of Genting Hong Kong, the banks involved and the Malaysian banking sector in general have strong resilience to challenges.”

The Treasury Secretary’s claim that our banks are strong despite losses on unsecured loans is a way out of dealing with a serious failure in the banking sector.

Banks that are generous enough to part with people’s money to corporations, which may include rogue corporations and scammers, survive the losses by lending to borrowers of secured loans, particularly M40 and B40 (middle and bottom 40 percent) , impose strict conditions and penal conditions. Customers who depend on them for home, auto, personal and credit card loans.

Banks insist on tying everything up as collateral, charging exorbitant interest rates and penalties for the slightest delay in repayment.

In the event of a delay in payment, you are quickly on the case and even up to the point of enforcement. Some also engage the services of debt collectors who ceaselessly stalk and harass debtors.

This is likely how banks are generous in providing unsecured lending to large corporations, and as Zafrul claims, “despite strong resilience to challenges.”

As long as banks are free to issue unsecured loans to select customers, their victims are the mundane borrowers whose “eggs” are occupied with pathetic consumer loans.

Vijay 47: Zafrul made two points that should be of great comfort.

First, the Islamic banking sector in multiracial Malaysia was sufficiently advanced to distinguish between Syariah-compliant and conventional assets.

And second, that “if the Minister of Finance or the shareholders were to interfere in the day-to-day affairs of banks in Malaysia, it would be clearly wrong from a governance and administrative point of view”.

Both of these statements would earn about two sens of credibility in general in the open financial market, even if they were not accompanied by the now-accepted claim that “my brother did it.”

As is well known, the Finance Minister’s declaration of laissez-faire is only evident in grandiose speeches and never in practice.

That said, we still have to wonder why Anwar seems so concerned that Malaysian GLC banks have been lending to Hong Kong gambling houses.

If his concern had centered on such lending being made to offshore banks, or particularly without collateral, that would have been understandable and perhaps commendable. But no, he was upset because the beneficiary was from the gambling industry.

Would the generosity of the three banks have been okay if given to institutions other than Genting?

Anwar, it seems that your Abim (Muslim Youth Movement of Malaysia) days never really left you. On the other hand, your private international banking advisor might be PAS leader 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 specified assets of the borrower in the event of bankruptcy or liquidation or default of repayment.

The question is not to lend to a gambling company. The question is, why give “unsecured” loans to a gambling company? Zafrul avoids the question.


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Tags : covid pandemicinterest ratesunsecured loans
Richard Dement

The author Richard Dement