HKMA and HKAB Establish Joint Taskforce to Bolster SME Lending

The
Hong
Kong
Monetary
Authority
(HKMA)
and
The
Hong
Kong
Association
of
Banks
(HKAB)
have
announced
the
formation
of
a
joint
Taskforce
on
SME
Lending,
according
to
the

Hong
Kong
Monetary
Authority.
This
initiative
aims
to
enhance
support
for
small
and
medium-sized
enterprises
(SMEs)
facing
financial
challenges.

Background
and
Recent
Measures

Mr.
Eddie
Yue,
Chief
Executive
of
the
HKMA,
along
with
the
Chief
Executive
Officers
of
three
chairman
banks
of
HKAB,
addressed
the
press
regarding
recent
developments.
Since
the
inception
of
the
Banking
Sector
SME
Lending
Coordination
Mechanism
in
2019,
multiple
measures
have
been
implemented
to
support
SMEs,
including
the
Pre-approved
Principal
Payment
Holiday
Scheme
and
the
conversion
of
trade
financing
lines
into
temporary
overdraft
facilities,
aiding
many
SMEs
during
the
COVID-19
pandemic.

Despite
a
recovering
local
economy,
the
HKMA
recognizes
ongoing
challenges
for
SMEs.
In
response,
nine
measures
were
introduced
in
March
2024,
such
as
banks
not
demanding
early
repayments
from
mortgage
customers
repaying
on
schedule
and
not
adjusting
credit
limits
solely
based
on
collateral
value
changes.
These
measures
have
already
benefited
approximately
14,000
SMEs,
involving
an
aggregate
credit
limit
of
over
HK$31
billion.

Formation
of
the
Joint
Taskforce

The
newly
established
Taskforce
will
address
both
individual
cases
and
industry-level
issues.
It
will
set
up
a
mechanism
to
review
cases
of
SMEs
struggling
to
obtain
bank
financing,
refer
relevant
cases
to
dedicated
bank
teams,
and
develop
solutions
for
common
issues.
Additionally,
the
Taskforce
aims
to
enhance
communication
among
the
HKMA,
the
banking
industry,
and
the
commercial
sector
to
better
understand
and
support
SME
financing
needs.

Commitment
to
Risk
Management
and
Transparency

The
HKMA
will
continue
to
monitor
banks’
strategies
for
SME
support
through
its
supervisory
processes.
Banks
are
expected
to
maintain
effective
risk
management
to
protect
depositor
interests
while
providing
necessary
support
to
SMEs.
For
cases
of
prolonged
non-repayment,
banks
will
take
action
but
ensure
it
is
communicated
and
implemented
in
an
accommodating
manner.

In
terms
of
residential
mortgage
lending,
discussions
focused
on
improving
transparency,
efficiency,
and
customer
experience
in
approval
processes.
Banks
will
work
towards
informing
loan
applicants
of
outcomes
within
a
reasonable
period
after
receiving
necessary
documents.
These
aspects
will
be
further
examined
and
addressed
by
the
Taskforce
at
the
industry
level.

The
HKMA
and
the
banking
sector
remain
committed
to
supporting
SMEs
through
these
challenging
times,
ensuring
that
risk
management
practices
are
upheld
while
facilitating
necessary
financial
assistance.

Image:
The
Hong
Kong
Monetary
Authority
(HKMA)
meets
with
the
Chief
Executive
Officers
of
three
Chairman
Banks
of
The
Hong
Kong
Association
of
Banks
(HKAB).
From
left
to
right:
Ms.
Mary
Huen,
CEO,
Hong
Kong
and
Greater
China
&
North
Asia
of
Standard
Chartered
Bank;
Ms.
Luanne
Lim,
Chairperson
of
HKAB
and
Chief
Executive
Officer,
Hong
Kong
of
HSBC;
Mr.
Sun
Yu,
Vice
Chairman
and
Chief
Executive
of
Bank
of
China
(Hong
Kong);
Ms.
Carmen
Chu,
Executive
Director
(Banking
Supervision)
of
the
HKMA;
Mr.
Eddie
Yue,
Chief
Executive
of
the
HKMA;
and
Mr.
Arthur
Yuen,
Deputy
Chief
Executive
of
the
HKMA.

Image
source:
Shutterstock