In response to media reports of Hin Leong’s founder covering up US$800 million losses and the company owing US3.8 billion to banks, Enterprise Singapore (ESG), the Maritime and Port Authority of Singapore (MPA) and the Monetary Authority of Singapore (MAS) confirmed that there is no serious impact on oil trading and bunkering sectors and that the banking system remains sound.
ESG assessed that Singapore’s oil trading sector remains resilient notwithstanding the challenges posed by the drop in global demand for energy. The sector is sufficiently diversified with more than 130 significant global, regional and local companies that trade energy products. Singapore is also an important regional storage, blending and distribution hub for refined oil products.
While Hin Leong, one of Asia’s largest oil trader, is related to UT Singapore Services which owns Universal Terminals by common shareholdings, Universal Terminals is operated independently of Hin Leong. Besides Universal Terminals, there are other independent oil terminal operators in Singapore including Vopak, Oiltanking and Tankstore.
MPA has assessed that there will be no serious impact on Singapore’s bunkering industry. There may be some short-term minor disruptions due to the lapse of contractual obligations by Hin Leong’s subsidiaries, Ocean Bunkering Services and Hin Leong Marine International.
The Singapore bunkering sector is well diversified with 43 other licensed bunker suppliers, including Minerva Bunkering and TFG Marine which recently received their licenses.
MAS is in close contact with the banks on developments related to Hin Leong. MAS agrees with the assessment by ESG and MPA and has reminded the banks not to de-risk indiscriminately from the bunkering and oil trading sectors. Banks should, however, continue to apply judicious credit assessment on individual borrowers to manage their risks.
The banks are well capitalized and diversified in their exposures to these sectors. MAS is also closely monitoring liquidity and credit conditions in the market which, on the whole, continue to be supportive of households and businesses.