HKMA to look into SMEs’ bank repayment problems

Hong Kong Monetary Authority (HKMA) Deputy Chief Executive Arthur Yuen will head a new taskforce to address small and medium-sized enterprises (SMEs) that are struggling to repay loans to banks.

The task force was established in response to calls from small businesses demanding that lenders stop demanding early repayments or loan cancellations.

Speaking to reporters after a meeting with representatives of the Hong Kong Association of Banks on Friday morning, HKMA director general Eddie Yue said the new organisation would be tasked with helping individual SMEs solve their financing problems.

“Each case has its own background and uniqueness, and each case may be handled differently. I would encourage chambers of commerce or companies to immediately refer cases to the Office if they hear or see that a company is having difficulties, so that the task force can address them and resolve them quickly with the banks,” he explained.

During a subsequent press conference, Task Force Co-Chair Arthur Yuen said the HKMA had only received a small number of complaints from SMEs that required intervention.

Yuen added that the banking sector is supporting small and medium-sized businesses, noting that since 2020, lenders have allowed about 4,000 small businesses to delay loan repayments.

He also added that a potential interest rate cut by the U.S. Federal Reserve next month could help struggling small businesses.

“The interest burden that (SMEs) are facing now is probably significantly higher than it was three years ago,” he told reporters.

“It’s really a question of expectations, forward-looking, where interest rates are going, which would help banks assess the ability of the corporate model, including SMEs, to repay because then they’ll have an interest rate outlook. They’re aligning the interest rate outlook with their credit models, and that would certainly be helpful.”

Amid concerns over the tightening of home equity lending policies, Yuen said the HKMA has urged lenders to complete verification procedures for such loans within two weeks unless applicants fail to provide relevant required information.