The Singapore brokerage unit of AMMB Holdings Bhd (AmBank Group), AmFraser, is believed to have exposure of close to S$150mil of financing for trades related to the recent fallout from a penny stock crash

November 12, 2013 Leave a comment

Updated: Tuesday November 12, 2013 MYT 8:17:53 AM

Some snowball effect expected

BY GURMEET KAUR AND YVONNE TAN

PETALING JAYA: The Singapore brokerage unit of AMMB Holdings Bhd (AmBank Group), AmFraser Securities Pte Ltd, is believed to have exposure of close to S$150mil (RM384.61mil) of financing for trades related to the recent fallout from a penny stock crash involving Singapore Exchange Ltd (SGX)-listed Blumont Group Ltd, LionGold Corp Ltd and Asiasons Capital Ltd, sources said.AmBank did not respond to StarBiz’s e-mail queries on the matter.

Analysts feel it is too early to examine the impact, as details are scarce.

“AmBank has not given us any guidance on this,” said the head of a research house who tracks the banking group.

Nevertheless, another banking analyst who had spoken with the management of AmBank said that it had indicated that there may be no material impact on the banking group’s earnings.

“The amount of exposure may not mean a total loss, as some of the trades may have been collateralised, while some could be just trading losses,” he said.

He said that there might be some snowballing effect when remisiers took a hit, but in the end, it would depend on how the bank made the provision.

“The ultimate hit on the bottomline may not be that huge, given also that the AmBank Group is a big bank. It may have other sources of income to cover this up.”

It is understood that AmBank is expected to highlight this further when it announces its next quarterly results, which are expected this week.

AmBank reported a net profit of RM467.86mil on revenue of RM1.99bil for the first quarter ended June 30.

AmFraser Securities is one of several brokers thought to have exposure to losses involving the infamous trio of Blumont, LionGold and Asiasons even as regulators across the causeway start a comprehensive review of the activities that had resulted in the huge rise and subsequent crash of these stocks, according to reports.

The Singapore unit’s paid-up capital as at March 31 stood at S$32.5mil.

Talk that AmFraser Securities may have been impacted came amid reports that Singapore broker firms had imposed new restrictions on an extended list of penny shares listed on the SGX.

Singapore’s The Straits Times had recently reported that it “understands that AmFraser Securities curbed trading on 11 counters”, a move that requires traders to pay cash upfront for shares purchased or only allow clients to buy the shares if they had sufficient cash in their accounts.

The report said the list of restricted counters had included the trio – Asiasons, LionGold and Blumont.

To recap, the trio had seen their shares in somewhat of a free-fall since Oct 3.

On Oct 4, the SGX suspended trading in the three firms and made them designated counters on Oct 6.

It has since lifted the trading restrictions imposed on them.

In designating the counters, SGX officials pointed out to its rules which state that the exchange could designate a security “if, in its opinion, there has been manipulation of the security, excessive speculation in the security, or it is otherwise desirable in the interests of markets established or operated by SGX”.

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