Brexit: Singapore bank UOB suspends London property loans
- 30 June 2016
- From the section Business
One of Singapore's largest lenders, UOB, says it has suspended its loan programme for London properties.
The decision comes in response to uncertainty caused by the UK's decision to leave the EU, the bank said.
The vote on 23 June caused global market turmoil and pushed the pound to 31-year lows. The Singapore dollar has gained about 10% since the referendum.
Singaporeans were the top Asian buyers of UK commercial property in 2015, according to consultancy Knight Frank.
UOB told the BBC in a statement: "We will temporarily stop receiving foreign property loan applications for London properties."
"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."
Analysis: Karishma Vaswani, Asia Business correspondent
Read this as the bank telling Singapore borrowers - hold your horses chaps, you may be in for a bumpy ride.
Market sources tell me that UOB has the highest exposure amongst the big three banks in Singapore to London property loans. UOB doesn't disclose how much it lends out for the London portfolio but it also offers international loans for Australia and Thailand.
"From a banking perspective, this [the possibility of Brexit] is just the tip of the iceberg," Sam Ahmed, Managing Director of Deriv Asia told me. "And banks will look to protect themselves from unintended consequences and adopt a more conservative approach by limiting their exposure for UK based assets."
Read more from Karishma: Asian banks assess London property risks
Singapore's biggest lender, DBS, is continuing to provide financing, but is advising its customers to be cautious.
"For customers interested in buying properties in London, we would advise them to assess the situation carefully," DBS executive director of secured lending, Tok Geok Peng, told the BBC.
"With foreign exchange risks, even if the value of the overseas property rises, any gains will be eroded if the country's currency depreciates against the Singapore dollar," Mr Tok explained.
Singapore's other big lender, OCBC bank, told the BBC it had not made any changes to its advisory policy.
Head of consumer secured lending Phang Lah Hwa told the BBC that OCBC was still making financing available for London properties and was "monitoring the situation closely".