Labuan offshore banks post losses<\/p>\n
KUALA LUMPUR (Dow Jones): Offshore banks operating in
\nMalaysia's tax haven of Labuan island on the north coast of
\nBorneo posted a pretax loss of US$268.9 million for 1998,
\nswinging from a pretax profit of $120.3 million the year before.<\/p>\n
It was the first loss incurred by the Labuan offshore banks
\nsince the tax haven was established nine years ago.<\/p>\n
A report by the financial center's chief regulator, made
\navailable to Dow Jones Newswires Monday, states the loss was due
\nto higher non-performing loans among banking groups hurt by the
\nregional economic crisis.<\/p>\n
Non-performing loans hit 11 percent of total loans at end
\n1988, compared to 1.1 percent in 1997, according to the Labuan
\nOffshore Financial Services Authority, or Lofsa.<\/p>\n
It added that total loans outstanding declined by 13.3 percent
\nto $15.1 billion, compared to $17.5 billion in 1997.<\/p>\n
Set up in 1990, the Malaysian government has spent nearly six
\nbillion ringgit transforming this one-time sleepy backwater into
\na regional financial hub.<\/p>\n
To preserve its position as an offshore financial center,
\nLabuan is the only place in Malaysia where capital controls,
\nwhich the government imposed last September, don't apply. Here
\nforeigners are allowed to withdraw and invest funds without any
\nrestrictions.<\/p>\n
\"The significant increase in non-performing loans reflected
\nthe effects of the regional financial crisis on Labuan offshore
\nbanks as the bulk of the loans exposures were to customers in the
\ncountries in Asean,\" the report said referring to member nations
\nof the Association of Southeast Asian Nations.<\/p>\n
There are currently 62 offshore banks operating in Labuan and
\nthe Lofsa report says that total provisions for non-performing
\nloans made by those banks amounted to $921.7 million in 1998. As
\na result of the higher non-performing loans, the ratio of loan
\nloss reserves to non-performing loans was 58.1 percent in 1998,
\ncompared with 101.9 percent in 1997, the Lofsa report said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/labuan-offshore-banks-post-losses-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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