The Monetary Authority of Macau (AMCM) has dismissed concerns around the potential impact of satellite casino foreclosures on Macau’s financial institutions, revealing that it regularly collects information on loans to “satellite casinos” and considers the risk to be manageable.
The three-year transition period for Macau’s 11 satellite casinos will expire at the end of year, after which time their management companies will no longer be permitted to partake in revenue share agreements with concessionaires under whose concessions they operate. Instead, they will be classified purely as management companies and be required to enter into basic management agreements for a fixed fee.
However, the operators of these satellite casinos as well as local financial experts have warned that any reduction on already tight profit margins could render it impossible for these companies to repay existing loans. Some estimates suggest the total outstanding debt tied to satellite casinos and their surrounding commercial properties amounts to as much as HK$39 billion (US$4.88 billion).
In response to a question from a member of Macau’s Legislative Assembly, the Macau government mentioned that the AMCM regularly collects information on the loans of satellite casinos.
“At present, such loans account for a very small proportion of total bank loans and are secured by a sufficient number of properties, so the risk is manageable,” it said in a written response.
The Labour Affairs Bureau also pointed out that it has maintained communication with concessionaires and kept abreast of the situation as it relates to satellite casino employees, including to where they may be relocated should some or all satellites cease operations.
However, the government’s response did not mention any details of this “contingency plan” or the program to provide new work for displaced employees.
