KUALA LUMPUR – Datuk Seri Tengku Zafrul Tengku Abdul Aziz has jumped to the defence of local banks currently entangled in a crisis involving the now-insolvent Genting Hong Kong (HK), saying financial institutions are capable of riding out the storm.
In a lengthy statement today, the finance minister said while he regrets Genting HK’s decision to file for liquidation, the banks involved are extremely resilient in facing the various business challenges.
He was responding to opposition leader Datuk Seri Anwar Ibrahim’s statement on Thursday demanding an explanation over how RM2.51 billion in unsecured loans were granted by Malayan Banking Bhd, CIMB Group Bhd, and RHB Bank Bhd to the gambling company.
Among other things, the PKR president had questioned why the loans were given without any binding guarantee, the role of national assets like Permodalan Nasional Bhd (PNB), Khazanah Nasional Bhd and Employees Provident Fund (EPF) as majority investors in the banks, and how these loans are to be honoured.
According to Tengku Zafrul, Bank Negara Malaysia (BNM) has set out guidelines on loan policies for all banks to adhere to, and that the institutions also conduct their own due diligence and credit assessment of potential borrowers.
“As long as the banks abide by these guidelines, they are free to issue loans at their own discretion,” he said today.
Tengku Zafrul said the ministry and all its stakeholders have no role in the process of approving loans, as these are done at the sole prerogative of the banks.
He added that the issuance of unsecured loans is also not unusual as the onus is on the financial institutions to approve them, taking into account their risk appetite, credit assessment and internal governance processes.
The minister said in the case of Genting HK, the loans were approved before the Covid-19 pandemic, and as the company is involved in the leisure sector, its business was bound to be affected by the health crisis.
This certainly could not have been predicted when the loans were approved. We must remember that not only local banks give unsecured loans to Genting HK, but also others from overseas.
“Is Anwar trying to give an impression that all overseas banks had also acted recklessly in this case?”
On the role of Khazanah, EPF and PNB as the majority investors in the three banks, Tengku Zafrul said shareholders are not involved in the day-to-day operations of these institutions as this would have gone against the practice of good governance and management.
“I’m confident that as former finance minister himself, Anwar would have been aware of the difference between the role of a board member and the company’s management.
Responding to the banks’ decision to issue loans to a gambling company like Genting, Tengku Zafrul said the distinction between shariah and conventional assets have been made possible thanks to the multiracial composition of Malaysia and the progressive policies of local Islamic banks.
“If this issue is truly important, then why is it that when you were the finance minister, you did not issue any order to the banks not to approve loans to Genting Group?”
On Monday, Genting HK announced that Tan Sri Lim Kok Thay had resigned as chairman and chief executive officer of the company, just days after the firm filed for liquidation of its cruise line Bermuda.
Genting HK has been embroiled in a dispute with the German state of Mecklenburg-West Pomerania, with the former demanding to compensation of US$88 million (RM368 million) promised as part of a rescue plan for its shipbuilding.
However, a German court had reportedly ruled in favour of Mecklenburg-West Pomerania and rejected the payment request from Genting HK. – The Vibes, January 29, 2022
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