Featured Product

    HKMA Launches Fintech Pilot Trial Facility, Issues Other Updates

    February 23, 2022

    The Hong Kong Monetary Authority (HKMA) and the People’s Bank of China (PBC) are ready to accept applications from financial institutions and technology firms for conducting pilot trials of cross-boundary fintech initiatives in the Greater Bay Area (GBA). In October 2021, HKMA and PBC signed a Memorandum of Understanding (MoU), agreeing to link up the PBC’s Fintech Innovation Regulatory Facility with the HKMA’s Fintech Supervisory Sandbox. HKMA and PBC have jointly developed a set of operational procedures for the fintech pilot trial facility. To access the facility, applicants will be requested to complete a sandbox application form and provide information about their company background, the fintech product or service to be tested, as well as the scope of testing. Additionally, HKMA announced changes to certain loan guarantee schemes and the payment holiday scheme amid the pandemic.

    HKMA and the Banking Sector SME Lending Coordination Mechanism jointly announced that the Pre-approved Principal Payment Holiday Scheme (Scheme) will be extended for another six months to the end of October 2022. The Scheme will also offer a one-year partial principal repayment option (20% of the original principal repayment amount) to those customers who are financially capable and willing to resume principal repayment gradually. Below is the treatment set out for different types of loans:

    • For instalment loans, such as mortgages and commercial vehicle loans, the principal repayment amount in each installment will be 20% of the original principal repayment amount, for a period of one year. The loan tenor should generally be extended correspondingly. Banks should apply the same treatment to commercial vehicle loans taken out by personal customers.
    • For trade facilities, loans with bullet payments falling due within one year and outstanding revolving facilities, banks may discuss with customers having regard to the actual circumstances and allow them to repay the amount due by regular instalments over a period of two years.

    HKMA also announced that the application period for the 80% Guarantee Product, the 90% Guarantee Product, and the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) will be extended to June 30, 2023. The maximum loan amount per enterprise under the Special 100% Loan Guarantee will be raised from the total amount of employee wages and rents for 18 months to that for 27 months, subject to a ceiling of HKD 9 million (originally HKD 6 million) while the maximum repayment period will be extended from eight years to ten years. The application period of the 100% Personal Loan Guarantee Scheme (PLGS) will also be extended to the end of April 2023. The maximum loan amount per borrower will be increased from six times to nine times the average monthly income during employment, subject to a ceiling of HKD 0.1 million (originally HKD 0.08 million). In addition, the maximum repayment period under the PLGS will be extended from six years to ten years and the principal moratorium arrangement will be extended from 12 months to 18 months. HKMC Insurance Limited (HKMCI) will also extend the principal moratorium arrangement under the SFGS by six months to a total of 30 months and the application period for principal moratorium will be extended to end of December 2022. In addition, HKMCI announced that the following amendments are made to the Mortgage Insurance Program for completed residential properties:

    • For mortgage loans up to 90% loan-to-value (LTV) ratio applicable to first-time homebuyers, the maximum property value is amended to HKD 10 million
    • The maximum property value eligible for mortgage loans up to 80% LTV ratio is amended to HKD 12 million
    • To avoid a significant drop of the allowable LTV ratio for mortgage loans with property value slightly over HKD 12 million, coverage of the Mortgage Insurance Program is extended to properties valued from above HKD 12 million and up to HKD 19.2 million, subject to a mortgage loan cap of HKD 9.6 million. 
    • The maximum debt-to-income (DTI) ratio for both the above-mentioned and existing Mortgage Insurance Program loans is set at 50%, and borrowers have to meet the stressed DTI ratio. First-time homebuyers will still be eligible for Mortgage Insurance Program loans up to 80% or 90% LTV ratio even if they cannot meet the stressed DTI ratio, subject to an additional adjustment to the premium based on relevant risk factors.

    Additionally, the Hong Kong Mortgage Corporation Limited (HKMC) signed a memorandum on understanding (MoU) on infrastructure loans framework with each of the 14 partner banks. These banks are Australia and New Zealand Banking Group, Bank of China (Hong Kong), BNP Paribas, China Construction Bank (Asia), Citibank, N.A., DBS Bank, Industrial and Commercial Bank of China (Asia), J.P. Morgan Securities (Asia Pacific), Mizuho Bank, National Australia Bank, Oversea-Chinese Banking Corporation, Banco Santander, S.A., Societe Generale, and Sumitomo Mitsui Banking Corporation. These MoUs set out the principal terms for potential infrastructure loan cooperation between the HKMC and the partner banks on both primary participation and secondary sale bases, including the loan selection criteria, mode of participation, and engagement process.

     

    Keywords: Asia Pacific, Hong Kong, Banking, Fintech, Regtech, Regulatory Sandbox, Payment holiday, Loan Repayment, Loan Guarantee, SME, Mortgage Insurance Program, LTV, Credit Risk, Lending, Basel, Covid-19, HKMCI, PBC, HKMA

    Featured Experts
    Related Articles
    News

    UK Authorities Consult on Implementation of Basel 3.1 Standards

    The UK authorities have published consultations with respect to the Basel requirements for banks. The Prudential Regulation Authority (PRA) published the consultation paper CP16/22 on rules for the implementation of Basel 3.1 standards.

    November 30, 2022 WebPage Regulatory News
    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

    FSB and NGFS Publish Initial Findings from Climate Scenario Analyses

    The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.

    November 15, 2022 WebPage Regulatory News
    News

    FSB Issues Reports on NBFI and Liquidity in Government Bonds

    The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.

    November 14, 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

    EU Finalizes Rules Under Crowdfunding Service Providers Regulation

    The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.

    November 08, 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
    RESULTS 1 - 10 OF 8597