S'pore banks in China act to protect staff, customers

Measures to limit spread of coronavirus include flexible work arrangements, branch closures

About 700 OCBC employees across China will eat packed lunches at their desks this week to minimise their chances of catching the coronavirus that has plagued the world's second-largest economy.

They will hold meetings via telephone or video conference calls, and those who must meet face to face will have to wear face masks.

These are among the measures OCBC has rolled out to keep employees and customers safe as Chinese workers return to their jobs after an extended government-ordered closure to contain the virus, OCBC Wing Hang China chief executive Wang Ke told The Straits Times in a telephone interview from Shanghai on Monday.

Singapore banks and finance companies that ventured to China are taking precautions to protect their staff and customers there, going as far as to temporarily close outlets.

While analysts said the outbreak is unlikely to hit Singapore banks in the long term, some raised concerns regarding its impact other than the effects of their temporary branch closures.

SAC Capital senior analyst Terence Chua and KGI Securities Singapore research head Joel Ng said separately that companies with weak balance sheets may default on their loans if the uncontrolled spread of the virus leads to poorer business and consumer sentiment.

Mr Chua said: "Net interest margins are also likely to narrow if central banks ease monetary policy to stimulate growth."

CMC Markets' market analyst Margaret Yang noted that United Overseas Bank's (UOB) exposure to Greater China ranks the lowest among the three local banks, which include DBS Bank and OCBC Bank.

She added that short-term economic headwinds are "likely to weigh on DBS' asset quality in China, which accounts for a significant portion of the group's overall loan book". The non-performing loan ratio of DBS' Greater China assets stands at 0.9 per cent, she said.

"Weaker economic outlook in China and Hong Kong (is) set to weigh on OCBC's China business, which accounts for a significant portion of the group's loan book," Ms Yang said.

But its non-performing loan ratio of 0.4 per cent in China is among the lowest in OCBC's regional markets, she noted. "This suggests that asset quality in China is likely to be very resilient."

OCBC's Mr Wang said the management had met over the Chinese New Year break to put in place measures to fight the outbreak. OCBC Bank, the parent company of OCBC Wing Hang China, closed seven of its 24 branches and sub-branches.

UOB shut two outlets in Beijing and Shanghai. It has 16 branches and sub-branches in China, according to its website. "Only a small number of colleagues are in the office to support critical business and customer services," UOB said in a statement on Monday.

A DBS Bank spokesman said all its 35 branches and sub-branches in mainland China are open. DBS has adopted flexible work arrangements for staff, including working from home and placing them at different sites and on separate shifts.

OCBC's Mr Wang said the bank also has split operations, among other measures, but it increased its manpower from 400 last week in anticipation of busier operations in China. However footfall has been slow, he said, estimating that road traffic is about 70 per cent of what it was in the same period in previous years. "(There are) just a few customers at the branches," he said.

The Chinese were one of the earliest adopters of digital banking, thus reducing the need to go to branches, Mr Wang added.

Singapore fintech start-up YouTrip said little has changed at its offices in Hong Kong and Thailand - which are among the places where the coronavirus that originated in Wuhan has spread to - as employees are equipped to work remotely. It added that workers only need an Internet connection to hold meetings and attend to customers' calls.

Maybank Kim Eng senior analyst Thilan Wickramasinghe said that "a large part of (local banks') exposure is short-end working capital, trade and financial institution lending".

Exposure to front-line sectors affected by the virus outbreak, such as domestic China retail and healthcare, should be very limited, he said. "Singapore banks' North Asia presence may actually become a benefit as supply chains from China look to relocate to South-east Asia to diversify risk," he added.