DBS has the largest exposure to Ezra at US$452m.
As the banks do not disclose their lending exposures to individual clients, CIMB analysts adopt an arbitrary approach and assume each company’s debt is equally split among its principal bankers as listed in its annual report.
Based on this assumption, analysts estimate that DBS has the largest exposure to the Ezra group of companies at S$637m (US$452m), followed by OCBC at S$300m (US$213m) and UOB at S$166m (US$117m). DBS’s larger exposure is mainly due to its lending to EMAS Chiyoda Subsea, given that it was the co-lead arranger for the loan facility for EMAS Chiyoda’s main vessel, the Lewek Constellation.
"Should the entire Ezra group go into liquidation, the banks will have to recognise their exposures as NPLs and make adequate provisions for the unrecoverable amounts. Based on 40-80% write-down in book value of fixed assets across the group, we estimate DBS will have to make specific provisions (SPs) of 8-16bp, OCBC: 9-12bp and UOB: 6-7bp. This assumes no SPs have been taken yet, and will impact DBS’s FY17F net profit by 6-12%, OCBC: 5-8%, and UOB: 4-5%," said CIMB.
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