Ted Hisokawa
23 Aug 2024 10:50
The Hong Kong Monetary Authority (HKMA) and the Hong Kong Banking Association (HKAB) have established a joint taskforce to enhance lending support for SMEs.
The Hong Kong Monetary Authority (HKMA) and the Hong Kong Banking Association (HKAB) have announced the establishment of a joint task force on SME lending, according to the Hong Kong Monetary Authority. The initiative aims to enhance support for small and medium-sized enterprises (SMEs) facing financial difficulties.
Background and Recent Actions
Eddie Yue, Chief Executive Officer of the Hong Kong Monetary Authority (HKMA), spoke to the media together with the CEOs of the three chairman banks of the Hong Kong Banking Association (HKAB) about recent developments. Since the introduction of the SME Lending Steering Mechanism in the Banking Sector in 2019, several measures have been implemented to support SMEs, including the pre-approved principal repayment holiday scheme and the conversion of trade finance lines into temporary overdraft facilities, which have supported many SMEs during the COVID-19 pandemic.
Despite the local economy recovering, the HKMA recognises the ongoing challenges faced by SMEs. In response, nine measures were introduced in March 2024, including measures that require banks to not require mortgage customers to repay their loans early and not adjust credit limits based solely on changes in collateral value. These measures have already benefited about 14,000 SMEs, with a total credit limit of over HK$31 billion.
Formation of a joint task force
The newly established task force will address both individual cases and industry-level issues. It will review cases of SMEs experiencing difficulties in obtaining bank financing, report relevant cases to a dedicated banking team, and establish a mechanism to develop solutions to common issues. The task force also aims to enhance communication between the HKMA, the banking industry and the commercial sector to better understand and support SME financing needs.
Commitment to risk management and transparency
HKMA will continue to monitor banks’ SME support strategies through supervisory procedures. Banks should maintain effective risk management to protect depositors’ interests and provide necessary support to SMEs. In the case of long-term non-payment, banks will take action but will communicate and implement it in a responsive manner.
In terms of home equity loans, the focus has been on improving transparency, efficiency and customer experience in the approval process. Banks will endeavour to inform loan applicants of the outcome within a reasonable time frame after receiving the required documentation. These aspects will be further reviewed and addressed by the task force at the industry level.
The Hong Kong Monetary Authority (HKMA) and the banking sector are committed to supporting SMEs during these challenging times, facilitating necessary financial support while ensuring that risk management practices are followed.
Image: The Hong Kong Monetary Authority (HKMA) meets with the CEOs of the three chair banks of the Hong Kong Banking Association (HKAB). From left to right: Ms Mary Huen, Chief Executive Officer, Hong Kong, Greater China and North Asia, Standard Chartered Bank; Ms Luanne Lim, Chairwoman of HKAB and Chief Executive Officer, HSBC Hong Kong; Mr Sun Yu, Deputy Chairman and Chief Executive Officer, Bank of China (Hong Kong); Mr Carmen Chu, Director, Banking Supervision, HKMA; Mr Eddie Yue, Executive Director, Banking Supervision, HKMA; and Mr Arthur Yuen, Chief Executive Officer, HKMA.
Image source: Shutterstock