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