ECONOMICS: Malaysian central bank
Far Eastern Economic Review
May 7, 1998
Banking Blunders
* By Salil Tripathi
143 Words
05/07/98
p60
Don't look further than the 1997 Bank Negara Malaysia report to
understand why Malaysian banks are in such a mess. In 1997, when the
Kuala Lumpur stockmarket lost 52% of its value, nearly 17% of all loans
made by Malaysian banks went to he finance share purchases. Despite a
glut in the property market, 40% of bank loans went to the real-estate
industry, mainly to finance construction. But manufacturing got just a
little more than one out of every 10 ringgit lent.
Though consumers faced job and salary cuts, banks lent merrily
to
households buying microwave ovens and colour TVs. Bad loans in the
consumer-credit category rose. No wonder finance companies were
scurrying around looking for cheap land on which to park repossessed
cars.
Most analysts believe that as companies continue to default, up to
20% of all bank loans might turn bad.