Insecurity surrounding the future of Macau’s casino business is causing international banks to shy away from those operating in the enclave. It has left the coast clearer for Chinese banks to gain a bigger slice of a market that is still booming. International financiers are worried by the lack of clarity surrounding renewal of licenses ahead of the current set expiring in 2020.
One senior loan banker with an international bank told Reuters, “It will just be a waste of time for us to do loan syndication when the borrower has not secured all the government approvals.”
A banker at one major Chinese bank contradicted this, saying, “The license expiry doesn’t bother us at all when it comes to extending a loan to these gaming operators. We don’t see any reason why the government would not renew their license to them in 2020 unless they do something terribly wrong.”
When it comes to choosing the right banks to take on the new projects, it seems the Macau gaming industry authorities have the final say. They likely won’t have any preference over the banks that each firm uses though.
“The concessionaires must have our approval to get finance. Any financing must have our approval. They choose the banks, they choose the way they do the finance,” said Manuel Das Neves, director of Macau’s Gaming Inspection and Coordination Bureau. “All the banks will certainly not finance without the government’s acknowledgement or approval.”
The reluctance of international banks to do business may benefit Chinese banks in the short term. If the industry moves elsewhere in the region, such as Singapore or even Saipan, the international banks may be the ones that are looking rather smug.