Azmin: MoF monitoring cruise operator Genting Hong Kong’s financial saga

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International Trade and Industry Minister Datuk Seri Azmin Ali speaks to reporters in Shah Alam January 27, 2022. ― Picture by Miera Zulyana
International Trade and Industry Minister Datuk Seri Azmin Ali speaks to reporters in Shah Alam January 27, 2022. ― Picture by Miera Zulyana

SHAH ALAM, Jan 27 — The Ministry of Finance (MoF) is monitoring the situation surrounding cruise operator Genting Hong Kong, which has filed to wind up the company.

Speaking to the press after chairing the Selangor Development Action Council Meeting here, International Trade and Industry Minister, Datuk Seri Mohamed Azmin Ali, also sought to allay concerns over the possible economic backlash from Genting Hong Kong’s financial woes, reported to might cause a major hit to the profits of three major Malaysian banks.

“Specifically, I think Maybank has come up with a statement and an explanation to that effect. But in general, as we mentioned, the World Bank has viewed the performance of our economic growth for this year, which is quite promising, with the latest figure produced by the World Bank, we are expected to achieve 5.8 per cent,” he said, referring to Malaysia’s economic growth.

He added that this is also in line with the MoF and Bank Negara Malaysia’s (BNM) projections, of between 5.5 and 6.5 per cent for this year.

“Like I said, Maybank has issued a statement that it would not leave an impact, but again, I think the MoF would monitor the situation closely but so far, based on the statement given by Maybank, it has no impact on our liquidity and I think Bank Negara Malaysia (BNM) and the MoF would take some measures to ensure that the liquidity in the country will remain strong,” he said.

Malayan Banking Bhd (Maybank) had, on Tuesday, denied the news report by Singapore’s Straits Times (ST) that it will face major financial trouble owing to exposure to Genting Hong Kong Ltd, labelling it as “baseless”.

“With regards to your query on recent news articles suggesting that Maybank is one of the three Malaysian banks that will face major financial trouble owing to exposure of Genting Hong Kong, Maybank would like to state vehemently that these allegations are baseless.

“While we do not comment on our exposure to customers or alleged customers owing to confidentiality obligations, Maybank would like to re-enforce that it observes strict accounting treatment related to provisioning and impairment of loans, as per International Financial Reporting Standard and Malaysian Financial Reporting Standard requirements, and these accounting treatments are also subjected to comprehensive reviews by our external auditors and regulators,” the report quoted a Maybank spokesperson as saying.

The ST report was on how Maybank, CIMB and RHB — among some the chief unsecured creditors of Genting Hong Kong, with a combined exposure of US$600 million (RM2.5 billion) — decide to move forward in dealing with the group would determine if the cruise operator sinks or swims.

The report said that a senior banker from one of the three institutions acknowledged that Genting Hong Kong’s troubles were worrisome after it announced this week that it had filed to wind up the company after it failed to secure financial lifelines for its businesses.

The report said that the three Malaysian banks — who all have regional presence in South-east Asia — are well capitalised, but a hit from Genting Hong Kong is set to have serious consequences.

Maybank is majority-owned by Permodalan Nasional Berhad (PNB), which is the premier state-owned fund management company, designed to spur corporate ownership among the country’s politically dominant Malay community.

Khazanah Nasional, the country’s top sovereign wealth fund, is the controlling shareholder at CIMB, while the Employees Provident Fund (EPF) has a majority interest in RHB.

The report said that the banks are a major source of dividend income for the three state-owned entities, and huge provisions because of the troubles at Genting Hong Kong could have a serious impact on profits, as well as the share prices of the financial institutions.

Genting Hong Kong’s liquidation filing came just a week after its German shipbuilding subsidiary MV Werften went into insolvency, a development that triggered cross-defaults for the entire group’s various financing arrangements amounting to more than US$2.7 billion.

The troubles at Genting Hong Kong are not expected to pose any serious problems for gaming tycoon Tan Sri Lim Kok Thay’s other businesses in Malaysia and Singapore.

Several investment analysts have speculated that Lim — who owns a 76 per cent interest in Genting Hong Kong — could turn to his more profitable entities to bail out the Hong Kong operations, but private equity executives with ownership in the Genting Group said that it was unlikely.

Trouble started brewing at Genting Hong Kong when MV Werften’s US$688 million lifeline was pulled back by the German government, forcing it into insolvency.

In a statement earlier today, the RHB Banking Group also proclaimed its financial resilience after being connected to potential losses for Malaysian banks.

RHB touted its strong capital and liquidity position and said that it has always and continues to be preemptive in all its dealings to make certain its asset quality is firmly maintained.

“We refer to the recent news articles suggesting that RHB is amongst a number of banks that will be greatly impacted by developments at Genting Hong Kong. In this regard, we would like to reiterate that RHB does not make public comments on matters concerning its customers.

“Nevertheless, we would like to state that as a financial services group we exercise prudence in our financial management practices, and in doing so we continue to take proactive measures to ensure that our asset quality remains strong. RHB is financially resilient with strong capital and liquidity positions,” a spokesman for RHB told Malay Mail in a statement.

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