UOB, one of Singapore’s largest banks, says it has suspended its loan programme for London properties.
According to a report on the BBC’s website, earlier today, the banking giant said that the decision comes in response to uncertainty caused by the UK’s decision to leave the EU.
The UK’s vote on 23 June to exit the EU has caused global market turmoil and has seen the pound drop to a 31-year low, whilst the Singapore dollar has gained about 10% since the referendum.
The news could significantly impact on the UK capital’s property boom, particularly as Singapore was at the the top of a survey of 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.”
UOB doesn’t disclose how much it lends out for the London portfolio, but the BBC report highlighted that, it is understood, that UOB has the highest exposure amongst the big three banks in Singapore to London property loans.
‘Tip of the iceberg’
“From a banking perspective, this [the possibility of Brexit] is just the tip of the iceberg,” Sam Ahmed, managing director of Deriv Asia told the BBC. “And banks will look to protect themselves from unintended consequences and adopt a more conservative approach by limiting their exposure for UK based assets.”
Singapore’s biggest lender, DBS, told the BBC that it is continuing to provide financing, but is advising its customers to be cautious. And Singapore’s other big lender, OCBC Bank, also said that it had not made any changes to its advisory policy but was “monitoring the situation closely”.