Singapore's UOB sues Lippo, 7 other firms over home loan anomaly

Loans for 37 condos have defaulted.

It has been noted that Singapore-based United Overseas Bank (UOB) is suing Lippo and seven others for allegedly conspiring to get inflated home loans of SGD181m.

According to a research note from Maybank Kim Eng, based on information from The Straits Times, UOB is suing Lippo Group’s subsidiary and seven others over SGD181m in housing loans for the purchase of 38 condominium units at Marina Collection in Sentosa.

Loans for 37 of these have defaulted. It said it was not informed of the 22-34% discounts offered for the units and that the buyers had secured inflated home loans from the bank.

Here's more from Maybank Kim Eng:

We understand from management that these loans were already classified as NPLs in 2Q-3Q14. Cross-checks with disclosed financials indicate a net increase of SGD169m in UOB’s housing NPLs during these two periods.

Management does not expect more to be recognised. Some specific provisions have been made and not much more is expected.

This is because the loans have LTVs of 75%, based on current market valuations. No unit has been auctioned off.

As we suggested in our 5 Jan sector note, “Xenophobia” unwarranted, UOB should be the most exposed to Sentosa.

But as much of its mortgage growth occurred during the early housing boom, its NPL risks should be limited.