Hong Kong’s finance chief asks banks to help out businesses and homeowners #NewsUnitedStates

“I hope that banks will ensure that their policies to support small and medium-sized enterprises can also be implemented in frontline services,” he said on his social media page.

“As for individual more complex and difficult cases, the [Hong Kong Monetary Authority] will communicate with banks to follow up and provide assistance.”

Hong Kong homeowners have suffered a sharp depreciation of real estate assets following a drop in transactions in the market in recent months. In June, for example, official statistics showed home transactions shrank 30.5 per cent month on month while sales value contracted 35 per cent.

The financial secretary’s calls could set the stage for possible policies as Chief Executive John Lee Ka-chiu is soliciting views for his policy address due in the final quarter of this year.

Chan noted he first instructed the Hong Kong Monetary Authority and banks to maintain communication with the commercial sector over companies’ cash flows when he delivered his annual budget address in February.

He said nine measures were then put in place, including that banks could not require mortgage customers who can make timely repayments to settle the amount early. Banks could not adjust credit limits if the value of the collateral depreciates, and they should allow at least six months as a grace period for customers if adjusting their credit limit during an annual review.

An authority spokeswoman said it had told banks to support SMEs in their business expansion, upgrade and transformation, under “prudent risk-management principles.”

“The [Monetary Authority] also requires banks to treat customers fairly and offer services to customers in a transparent, efficient and reasonable manner,” she said. “Banks should also maintain close communication to understand customers’ latest positions and needs so as to provide suitable products and services.”

Hong Kong is home to more than 360,000 SMEs, accounting for 98 per cent of enterprises and employing 45 per cent of the private sector workforce in the city, according to the Commerce and Economic Development Bureau.

A HSBC spokeswoman said the bank had stepped up efforts in helping SMEs manage short-term liquidity needs and encouraged them to go for growth opportunities through offers of interest rebates, service fee waivers, service and digital support and seminars.

“We have been implementing a flexible and accommodating approach to evaluate the financing needs of SMEs and homebuyers,” she said, adding that the bank maintained dialogue with the authority, business chambers and industry stakeholders.

Lawmaker Jeffrey Lam Kin-fung, a member of the city’s key decision-making Executive Council, called on banks to provide more help to SMEs regarding funding and offer customers more leniency when they were having difficulty making repayments.

“SMEs across the spectrum are having a difficult time regardless of which sector they belong to due to the geopolitical tensions and worsening business environment,” he said.

“The biggest problem for SMEs is the cash flow problem so banks have to provide more help and roll out more measures to rescue them. Banks should take a lenient approach to the firms in need to help them ride out this crisis.”

Lam said despite authorities working hard to attract foreign capital, talent and investors to the city, time was needed for them to settle.

“There’s no magic bullet and we need to offer some relief measures for struggling firms to stay afloat,” he said.

But he was optimistic that next year would be better as foreign firms had been planning to come to Hong Kong.

“The next few months will be difficult for SMEs as it still takes time for investors and talent to come,” he said. “After that the environment will turn better.”

Earlier in the day, one of the largest business chambers in the city, the Hong Kong General Chamber of Commerce, revealed that a recent survey found 74.3 per cent of those polled cited cash flow as their biggest challenge in the coming 12 months. It sent the questionnaire to 740 members engaged in professional services, trade, manufacturing and retail, and the response rate was 10 per cent.

The poll also found 39.2 per cent of respondents said they expected business to decline further this year while 35.1 per cent expected no growth at all. Other challenges included high labour costs and rents.

The chamber said that despite various schemes and initiatives already put in place to offer assistance, nearly half of those polled found it difficult or very difficult to secure financing. Only 54.1 per cent, however, had applied for at least one of the government’s 40 funding schemes.

“This suggests that increasing awareness of the various schemes and providing help in navigating the application process – as around three-quarters said the processing time was too long and bureaucratic – would help more SMEs to apply for the schemes,” it said.

Hong Kong’s economy grew at 3.3 per cent in the second quarter, year on year, following a revised 2.8 per cent annual growth in the first quarter. Tourist arrivals soared 64 per cent to about 21 million in the first six months of the year compared with the same period in 2023.

But tourists are not spending as much in the city as before the pandemic hit, with retail sales dropping four months in a row to June.

The Post has contacted key banks such as Bank of China, Standard Chartered Bank and Hang Seng Bank for comments.