HKMA announced certain enhancements to the 100% Loan Guarantee Product under the Small and Medium-Sized Enterprise (SME) Financing Guarantee Scheme. The total guarantee commitment of the Special 100% Loan Guarantee under the Scheme is being increased to HKD 50 billion. The maximum loan amount per enterprise is being increased to HKD 4 million and the principal moratorium arrangement is being extended to the first 12 months. The Special 100% Loan Guarantee will start receiving applications from next Monday (April 20) and the application period is being extended to one year.
In the SME Financing Guarantee Scheme, which is being administered by the HKMC Insurance Limited (HKMCI), the government will provide 100% loan guarantee for the announced total loan guarantee commitment amount. Earlier this month, HKMA had also outlined the expected treatment of these loans under the Banking (Exposure Limits) Rules (BELR) and the Banking (Capital) Rules (BCR). A participating authorized institution is expected to check the eligibility of the applicants based on the established criteria specified under the 100% Scheme and the loans will be transferred by the participating authorized institution as loan owner to The Hong Kong Mortgage Corporation Limited shortly after they are created without recourse. HKMA, therefore, considers that the residual credit risk exposure of the authorized institution should be very minimal and that the regulatory requirements on credit assessment and credit risk management, as set out in the SPM module CR-G-2, do not apply to loans granted by an authorized institution under the 100% Scheme.
Keywords: Asia Pacific, Hong Kong, Banking, Credit Risk, Guarantee Scheme, SME, HKMCI, BELR, Regulatory Capital, COVID-19, 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 ArticlePRA Publishes Q&A on Usability of Liquidity and Capital Buffers
ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.
EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.
HKMA published the seventh and final issue of the Regtech Watch series, which outlines the three-year roadmap of HKMA to integrate supervisory technology, or suptech, into its processes.
EC launched a targeted consultation to improve transparency and efficiency in the secondary markets for nonperforming loans (NPLs).
BIS, Danmarks Nationalbank, Central Bank of Iceland, Norges Bank, and Sveriges Riksbank launched an Innovation Hub in Stockholm, making this the fifth BIS Innovation Hub Center to be opened in the past two years.
FDITECH, the technology lab of FDIC, announced a tech sprint that is designed to explore new technologies and techniques that would help expand the capabilities of community banks to meet the needs of unbanked individuals and households.
EC released the EU Taxonomy Compass, which visually represents the contents of the EU Taxonomy starting with the EU Taxonomy Climate Delegated Act.
FDIC is seeking comments on a rule to amend the interagency guidelines for real estate lending policies—also known as the Real Estate Lending Standards.
EIOPA published its annual report, which sets out the work done in 2020 and indicates the planned work areas for the coming months.
The ESRB paper that presents an analytical framework that assesses and quantifies the potential impact of a bank failure on the real economy through the lending function.