(16 October 2019 – Hong Kong) Nine of Hong Kong’s biggest lenders have pledged their support to the Hong Kong Monetary Authority’s push to help 330,000 small-and-medium enterprises (SMEs) survive the city’s business slump, as four months of civil unrest added weight to the year-long US-China trade war in driving the local economy into recession.
The nine banks: Citibank, Hang Seng Bank, Bank of East Asia, DBS, ICBC Asia, CCB Asia, HSBC, Standard Chartered Bank and Bank of China (Hong Kong), along with the Hong Kong Mortgage Corporation, will provide a range of measures to help SMEs maintain their credit lines, and make good use of HK$300 billion released into the financial system this week by the de facto central bank.
The banks will adhere to a set of guidelines called “Hong Kong Approach to Corporate Difficulties”, similar to those adopted during the 2003 outbreak of the severe acute respiratory syndrome (Sars), which killed 299 people out of 1,755 infected, and nearly brought the economy to a standstill. The financial lifeline comes as SMEs are bearing the brunt of the economic fallout from Hong Kong’s worst political crisis in history.
Hong Kong’s economy, which shrank in the fiscal second quarter, is on track to a technical recession in the three months ending in December, as nearly 20 weeks of street mayhem and increasingly violent protests had kept visitors away and crimped retail sales.
The agreement will see banks will be sympathetic to SMEs that encounter financial difficulties, communicate with them and not undertake any hasty withdrawal of credit queues that would hurt the borrowers’ operations, according to the guidelines.
The banks agreed to make good use of the funds released this week when the HKMA cut its countercyclical capital buffer (CCyB) ratio by 50 basis points to 2 percent, the first reduction since 2015.