StanChart's troubled loans top $854m to problem companies including Hin Leong

LONDON (BLOOMBERG) - Problem loans at some of Standard Chartered's large clients may top US$600 million (S$854 million) as a string of corporate scandals coincides with woes at firms hit by the coronavirus pandemic.

NMC Health, the hospital operator that's uncovered evidence of fraud, and Hin Leong Trading, the Singapore oil trader being investigated by police, represent nearly US$500 million of lending for Standard Chartered, according to public filings. Separately, a South African farm bank that the London-based company lends to has defaulted on some of its debt.

Loan-loss provisions have dominated banks' earnings reports this quarter. With lockdowns in response to the pandemic devastating entire industries, lenders are bracing for a spike in corporate defaults and restructurings.

The exposures to problem companies are unlikely to lead to complete write-offs of the loans. However, in the case of Hin Leong, Standard Chartered and other banks may only get back 18 US cents on every dollar lent, according to affidavits.

Hin Leong and the other exposures only represent some of the highest-profile loans that could cause trouble for banks as pressures from the pandemic ripple through the financial system. While problems from the Singaporean firm will be manageable, banks are likely to be hit by bad loans to energy producers hit by oil's crash, analysts at Bloomberg Intelligence said in a report published last Friday (April 24).

Although headquartered in London, Standard Chartered makes its money largely from doing business with companies and individuals across Asia, Africa and the Middle East - where the bulk of its operations and staff are also based. Together, the three regions account for nearly 70 per cent of the bank's assets, according to data compiled by Bloomberg.

Standard Chartered is among several banks facing losses related to Abu Dhabi-based NMC. A committee has already been set up to restructure the hospital operator's US$6.6 billion debt pile; other lenders on the hook include Barclays and HSBC Holdings.

More recently, the implosion of secretive Singapore trading house Hin Leong as oil prices cratered has left banks attempting to claw back nearly US$4 billion in loans. Standard Chartered accounts for about US$240 million of that total; HSBC is the biggest creditor, with a US$600 million exposure.

Land and Agricultural Development Bank of South Africa, a state-owned provider of finance to the farming sector, missed a loan repayment this week. That triggered a default event, and the nation's government is considering a bailout. Standard Chartered co-led a loan to the company, and US$247 million remains outstanding, according to Bloomberg data. The development bank has said it's suffering a liquidity shortfall and may need to postpone future financial obligations.

A spokesman for Standard Chartered declined to comment.

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