Featured Product

    HKMA Extends Application Timeline for Certain COVID-19 Measures

    September 02, 2020

    HKMA announced that the application period for principal moratorium for the 80% and 90% Guarantee Products under the Small and Medium-Sized Enterprise (SME) Financing Guarantee Scheme has been extended for 6 months, to March 31, 2021. Additionally, the maximum duration of principal moratorium has been increased from 12 months to 18 months. The loan guarantee period can also be extended correspondingly. Furthermore, HKMA, along with the Banking Sector SME Lending Coordination Mechanism, announced that the Pre-approved Principal Payment Holiday Scheme has been extended for an additional 6 months, to April 2021. All loan principal payments of eligible customers falling due between November 2020 and April 2021 will be deferred by 6 months, except for repayments of trade loans, which will be deferred for 90 days.

    The Pre-approved Principal Payment Holiday Scheme covers all corporate customers that have an annual sales turnover below HKD 800 million and that have no seriously overdue loan payments. Corporate customers in need of relief are requested to contact their banks. Banks will handle each eligible customer’s case on a "pre-approved" basis. Banks may request customers (especially those who have been granted multiple extensions of payment holidays) to provide up-to-date business and financial information to better understand their needs when processing their cases. In line with the existing terms of the scheme, authorized institutions may require a borrower to settle trade facilities which are self-liquidating in nature if the borrower receives the underlying payment during the extended deferment period. Additionally, for revolving facilities that are due for credit review between November 01, 2020 and April 30, 2021, authorized institutions should not adjust downward the existing facility limits within six months from the review dates.

    All other terms of the Scheme—as set out in Annex to the HKMA circular dated April 17, 2020—shall continue to apply. HKMA also noted that, like the extension for trade loans announced in August 2020, this extension will not result in a loan being downgraded, nor will it cause the loan to be categorized as “rescheduled,” as long as the terms of the deferment are “commercial.” HKMA further notes that guidance issued by the Hong Kong Institute of Certified Public Accountants stipulates that the provision of payment holidays to borrowers should not automatically result in loans being considered to have suffered a significant increase in credit risk for the purposes of determining expected credit loss, which is in line with guidance published by BCBS. The above two principles apply regardless of whether or not a loan is already on a payment holiday. HKMA also mentioned that authorized institutions should continue to recognize and classify loans of borrowers that are unable to meet the restructured payment schedule in a timely manner, referencing the HKMA guideline on loan classification system, and to make adequate provisions as and when needed.

     

    Keywords: Asia Pacific, Hong Kong, Banking, COVID-19, SME, Principal Payment Scheme, Loan Classification, Credit Risk, Loan Guarantee, Payment Deferrals, Basel, ECL, Loan Moratorium, HKMA

    Featured Experts
    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News
    News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582