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Singapore’s UOB suspends London property loans after Brexit

United Overseas Bank, Singapore’s number 3 lender, became the first bank in the city state to suspend its loans programme for London properties in the wake of uncertainties caused by Britain’s vote to leave the European Union.

As Brexit spooked global markets and pushed the pound to multi-year lows, other Singaporean banks were also advising clients about risks such as currency losses even though they have not followed UOB’s move.

“We will temporarily stop receiving foreign property loan applications for London properties,” a UOB spokeswoman said in an email.

“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.”

The Singaporean dollar has gained 10 percent against the British pound since the referendum, eroding the value of assets held in Britain. Other risks for Singaporean banks have been exacerbated in recent months by an economic slowdown in Asia and rising bad debts in energy-related industries.

Moody’s Investors Service on Thursday revised the outlook on Singapore’s banks to negative from stable. This reflected the “weaker operating conditions” against the backdrop of softer regional economic and trade growth, Moody’s Vice President and Senior Credit Officer Eugene Tarzimanov said.

Property consultants say data on the number of properties purchased by Singaporeans in the United Kingdom is not tracked that closely. Banks do not disclose lending data for UK property purchases.

UOB’s 2015 result showed over 90 percent of its loans were to customers in Singapore, Malaysia, Thailand Indonesia and Greater China.

Singapore’s biggest lender, DBS Group Holdings, said it continued to provide financing for property purchases in London but was advising its customers to be cautious.

“For customers interested in buying properties in London, we would advise them to assess the situation carefully before committing to their purchases as there could be potential foreign exchange and sovereign risks,” Tok Geok Peng, executive director of secured lending, consumer banking group (Singapore) at DBS Bank, said in an email.

Analysts said Brexit could slow the sale of UK properties in Asia as buyers turned cautious.

“There have been London properties available for the last few months before the Brexit. The question is whether these properties can still continue to receive buyers in the short-term,” said Alice Tan, head of consultancy and research at Knight Frank Singapore.

UOB said it would review the market regularly to determine when it could resume its property loan offering.

UOB runs an international property loans programme that also covers properties in Australia, Japan, Thailand, Malaysia and Singapore.

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