The Hong Kong Monetary Authority (HKMA) published updates on the policy measures that were announced in context of the ongoing pandemic. The policy updates are for the application period extension of the 100% personal loan guarantee scheme, the support measures under the small and medium-size enterprise (SME) financing guarantee scheme, and the six-month extension of the pre-approved principal payment holiday scheme.
100% Personal Loan Guarantee Scheme. The government announced that the application period of the 100% Personal Loan Guarantee Scheme will be extended from the original expiry on October 27, 2021 to end-April 2022, so as to keep providing a supplementary financing option to individuals suffering from cessation of main recurrent incomes from employment in Hong Kong during the COVID-19 pandemic. Individuals wishing to apply can continue to contact the participating banks. The scheme has received overwhelming response since its launch on April 28, 2021 and the participating banks have received numerous enquiries and applications. As at September 10, 2021, more than 30,000 applications have been approved for a total loan amount of nearly HKD 2.1 billion, with the average loan size being about HKD 69,000. Among the approved applications, more than 80% (over 24,000 applications for a total loan amount of around HKD 1.7 billion) benefited from the principal moratorium arrangement.
SME Financing Guarantee Scheme. The maximum duration of principal moratorium for the 80% Guarantee Product, the 90% Guarantee Product, and the Special 100% Loan Guarantee under this scheme will be extended from 18 months to 24 months while the application period for principal moratorium will also be extended to end-June 2022. The government has also announced earlier an extension of the application period of the Special 100% Loan Guarantee by six months to end-June next year. The further extension of principal moratorium under the scheme will allow borrowing enterprises to defer principal repayments for a maximum of two years. This should effectively alleviate their cash flow burden. HKMC Insurance Limited will announce implementation details of the new enhancements in about two weeks. Meanwhile, borrowers may approach lending institutions to apply for principal moratorium and/or extend the principal moratorium period under current arrangements.
Principal Payment Holiday Scheme. HKMA and the Banking Sector SME Lending Coordination Mechanism jointly announced that the pre-approved Principal Payment Holiday Scheme will be extended for another six months to end-April 2022. All principal payments of loans falling due between November 2021 and April 2022 by eligible corporate customers will be deferred by six months except for repayments of trade loans, which will be deferred by 90 days. For loans that have been extended for 540 days or more successively since first drawdown (or trade loans that have been extended for 270 days or more successively since first drawdown), banks have the flexibility to offer different forms of suitable credit relief to help the customers ride out the current difficulties, subject to prudent risk management principles. Banks will not issue individual notifications to eligible customers regarding the deferment arrangement. Interested corporate customers may contact their banks and deferment requests will be handled on a "pre-approved" basis. As the usage of the scheme has dwindled to a low level on the back of steady economic recovery, HKMA and the Mechanism consider that planning should be made for the discontinuation of the scheme, in line with prudent risk management principles. HKMA will engage the banking industry to discuss the appropriate exit strategy, drawing reference from experience of overseas jurisdictions that are in different stages of withdrawal from pandemic relief measures.
Keywords: Asia Pacific, Hong Kong, Banking, COVID-19, Lending, Loan Guarantee Scheme, Loan Moratorium, Credit Risk, HKMA
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleOCC Identifies Operational Risk Deficiencies in MUFG Union Bank
Next ArticleFSC Taiwan Issues Multiple Regulatory Updates
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.
The Hong Kong Monetary Authority (HKMA) published a circular, along with the reporting form and instructions, for self-assessment, by authorized institutions, of compliance with the Code of Banking Practice 2021.
The Financial Conduct Authority (FCA) decided to register European DataWarehouse Ltd and SecRep Limited as securitization repositories under the UK Securitization Regulation, with effect from January 17, 2022.
The European Commission (EC) published the Delegated Regulation 2022/25, which supplements the Investment Firms Regulation (IFR or Regulation 2019/2033) with respect to the regulatory technical standards specifying the methods for measuring the K-factors referred to in Article 15 of the IFR.
The Bank of International Settlements (BIS) published a paper that assesses the ways in which platform-based business models can affect financial inclusion, competition, financial stability and consumer protection.
The Central Bank of Egypt (CBE) published a circular with instructions on emergency liquidity assistance to banks that are unable to meet their liquidity requirements.
The European Supervisory Authorities (ESAs) published the list of identified financial conglomerates for 2021.