StanChart Bad Loan Momentum Continues
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Standard Chartered could face up to $600 million in bad loans after major borrowers faced a series of reported predicaments.
Exposure to UAE healthcare chain NMC Health – currently restructuring $6.6 billion of debt – has further hit Standard Chartered’s balance sheet, according to public filings. The bank also faces defaults from state-owned Land and Agricultural Development Bank of South Africa.
When combined with the $240 million lent to disgraced oil trader Hin Leong, the troubled loans total more than $500 million for Standard Chartered.
Loan loss provisions will continue dominating headlines for bank earnings in the first quarter and Standard Chartered is not alone in facing balance sheet headwinds.
The Hin Leong debacle features some 23 banks that have lent a total of nearly $4 billion including $600 million from HSBC, the largest creditor. According to an affidavit, the group of lenders may only get back 18 cents on the dollar. Bad loans at Abu Dhabi-based NMC Health will also hit HSBC and Barclays.
Questions & Answers
Q.What is the estimated total amount Standard Chartered could lose from these bad loans?
What is the estimated total amount Standard Chartered could lose from these bad loans?
Standard Chartered could face up to $600 million in bad loans. This includes exposure to NMC Health, defaults from Land and Agricultural Development Bank of South Africa, and $240 million lent to Hin Leong.
Q.Which specific companies are contributing to Standard Chartered's bad loan issues?
Which specific companies are contributing to Standard Chartered's bad loan issues?
Standard Chartered's bad loans stem from exposure to UAE healthcare chain NMC Health, defaults from the Land and Agricultural Development Bank of South Africa, and $240 million lent to disgraced oil trader Hin Leong.
Q.Are other banks also affected by the Hin Leong situation?
Are other banks also affected by the Hin Leong situation?
Yes, Hin Leong's debacle involves approximately 23 banks, which collectively lent nearly $4 billion. HSBC is the largest creditor, having lent $600 million to the oil trader.
Q.Which other banks are affected by the problems at NMC Health?
Which other banks are affected by the problems at NMC Health?
Besides Standard Chartered, bad loans at Abu Dhabi-based NMC Health will also impact HSBC and Barclays. NMC Health is currently restructuring $6.6 billion of debt.
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