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
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards
The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.
The Basel Committee on Banking Supervision (BCBS) launched consultation on a Pillar 3 disclosure framework for climate-related financial risks, with the comment period ending on February 29, 2024.
The U.S. President Joe Biden signed an Executive Order, dated October 30, 2023, to ensure safe, secure, and trustworthy development and use of artificial intelligence (AI).
The Monetary Authority of Singapore (MAS) launched an integrated digital platform, Gprnt, also known as “Greenprint.”