Finance company stocks rise on changes

File photo of Hong Leong Finance's Clementi West branch. The finance company topped the gainers, surging 26 cents or 11.4 per cent to $2.54 after the Monetary Authority of Singapore announced it will relax some rules.
File photo of Hong Leong Finance's Clementi West branch. The finance company topped the gainers, surging 26 cents or 11.4 per cent to $2.54 after the Monetary Authority of Singapore announced it will relax some rules.PHOTO: HONG LEONG FINANCE

The shares of Singapore's three finance companies soared yesterday on news that regulators will make it easier for them to make unsecured loans and also lift a bar on foreign takeovers in the sector.

Hong Leong Finance, the biggest of the three finance companies, topped the gainers, surging 26 cents or 11.4 per cent to $2.54.

Singapura Finance rose 17.5 cents, or 20.2 per cent, to $1.04, while Sing Investments & Finance gained 15.5 cents, or 12.2 per cent, to $1.43.

Investors rushed the stocks after the Monetary Authority of Singapore announced yesterday that it will relax some rules on finance companies.

The three firms, which are the only licensed finance companies here, have around $16 billion in combined assets.

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They can accept retail deposits and are significant lenders to small and medium-sized enterprises.

A couple of the rule changes relate specifically to unsecured lending. They can take on uncollateralised business loans amounting to a larger proportion of their capital funds and lend a bigger quantum to a single borrower.

The new measures could mean even more competition for Singapore's three banks - DBS Group, OCBC Bank and United Overseas Bank - noted Mr Jeremy Teong, an analyst at Phillip Securities.

The MAS will also consider applications for mergers and acquisitions by foreign firms - if they meet certain criteria.

The new measures could mean even more competition for Singapore's three banks - DBS Group, OCBC Bank and United Overseas Bank - noted Mr Jeremy Teong, an analyst at Phillip Securities.

"The banks are already competing strongly for high-quality loans," he told Bloomberg.


Yasmine Yahya

A version of this article appeared in the print edition of The Straits Times on February 15, 2017, with the headline 'Finance company stocks rise on changes'. Print Edition | Subscribe