HKMA vows to act as banks tighten screws

Staff reporter

The Hong Kong Monetary Authority yesterday said it will set up a task force to handle any complaints from struggling small businesses who say lenders are calling loans early.

The news comes after businessmen and real estate professionals called on banks to ease their mortgage reviews and stop asking for early loan repayments from small and medium enterprises.

However, the HKMA has not yet received any complaints from SMEs who have been told by banks to repay their borrowings in advance, or about banks hiking loan rates on commercial properties, deputy chief executive Arthur Yuen Kwok-hang stressed.

Yuen said that HKMA had released nine measures to support the SMEs in loan repayments in March, but some cases may be mishandled due to a shortage of bank staff.

A task force to supplement the existing supportive measures will be established as well. Yuen appealed to small businesses to contact the HKMA if they find the loan calls inappropriate. "We will certainly interfere (in mishandled cases)," he said.

But Yeun dismissed reports that banks are tightening mortgage application reviews, citing the recovery in mortgage registrations following the removal of housing curbs in February.

And he underlined that a "reasonable" number of calls on loans made by banks are part of risk management.

Yuen was commenting on complaints made during a meeting with the Business and Professionals Alliance for Hong Kong and some 20 real estate sector representatives earlier this month.

Besides calling loans early, local banks are alleged to have hiked interest rates on some mortgages related to commercial properties even though the borrowers were making their repayments on time, adding more difficulties to their businesses, according to the representatives.

Lawmaker Jeffrey Lam Kin-fung, who is also vice chairman of the Business and Professionals Alliance for Hong Kong, said some homebuyers had lost out on their deals due to the longer mortgage application reviews as well as stricter reviews for loans on flats which are smaller than 200 square feet.

At the meeting, Lam had called on the HKMA to talk with local lenders who were tightening the screws due to high interest rates, as it would threaten the city's economic recovery.

Hong Kong's private home prices fell further in June to a new eight-year low due to a series of low-priced new projects, wiping out the gains after the government withdrew the "spicy" curbs or housing stamp duties, introduced more than a decade ago to cool the market, at the end of February.

In July, mortgage applications for completed homes rose by 22 percent month-on-month to a new 11-month high, though the number for the first seven months of the year was 37 percent lower than one year ago.

But the top four lenders including Bank of China (Hong Kong) saw their aggregate market share contract by 3.8 percentage points to 71.3 percent in July, according to Centaline Mortgage Broker.