HKMA announced measures to support lending to small and medium-sized enterprises (SMEs). These measure were agreed upon at the first meeting of the Banking Sector SME Lending Coordination Mechanism. Representatives from the Hong Kong Association of Banks (HKAB), nine major banks, and the Hong Kong Mortgage Corporation Limited (HKMC) attended the meeting. HKMA stated that banks should provide funding support to small and medium-size enterprises (SMEs) as far as their credit policies and risk management principles allow. Banks will follow the guidelines set out in the “Hong Kong Approach to Corporate Difficulties.”
Banks will enhance communication with the SME customers encountering financial difficulties and will not withdraw credit lines hastily or take other credit actions that will adversely affect the business operations of custoemers. At the meeting, the banks agreed to adopt the following measures to support SMEs:
- Banks agreed to make good use of the released countercyclical capital buffer (CCyB) by HKMA from 2.5% to 2.0%.
- Banks will proactively allow its SME customers to extend their repayment period, including making use of the recently introduced principal moratorium measure under the SME Financing Guarantee Scheme (SFGS), to lessen the cash flow pressure faced by SMEs. This measure will be adopted as far as risk management principles permit.
- Banks will continue to explore more concessionary measures to alleviate the financial burden of SMEs. Most banks have already reduced the guarantee fee and offered interest rebate under the SFGS.
- Banks are strengthening their internal communication to ensure that frontline staff understand the banks’ policy on supporting SMEs without compromising prudent risk management principles.
- Banks support the real estate sector to help retailers ride out the current difficult period through arrangements such as rental reduction or rent-free period.
- Banks indicated that they will make reference to the practices of those banks offering “Simple Bank Accounts” services and conduct less extensive customer due diligence according to risk-based principles to facilitate SMEs to open bank accounts.
- Banks indicated that they are willing to consider offering credits to finance SMEs’ plant relocation or construction of new plants to meet the additional expenses arising from the restructuring of their supply chains
- HKAB and the HKMC will set up a mechanism to collect SMEs’ opinions on the government’s SME support policies received by banks. The opinions will then be passed onto the government to facilitate enhancement of these policies.
Keywords: Asia Pacific, Hong Kong, Banking, SME Lending Coordination Mechanism, SME, CCyB, HKMA
Previous ArticleHKMA Announces Amendments to Mortgage Insurance Program for Banks
The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.
The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.
The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.