HK Monetary Authority orders banks to extend repayment holiday for small firms until October

06-Mar-2021 Intellasia | South China Morning Post | 6:49 AM Print This Post

The Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, has instructed all banks to extend a loan repayment holiday for small businesses by another six months.

The banks must allow 120,000 qualified corporate borrowers companies with an annual sales turnover below HK$800 million (US$103 million) and no serious overdue loans to defer repayments of principals of corporate loans or mortgages until October this year, the authority said on Thursday evening. The companies will only need to pay the interest due on their loans.

“Given the persistence of the Covid-19 pandemic around the globe and the severity of the ensuing impact on the global and local economy, some small and medium-sized enterprises continue to face cash-flow pressures,” the HKMA said.

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The second extension of the repayment holiday aims to provide more breathing space for local businesses that have been hit hard by the city’s worst economic recession on record. Hong Kong’s economy shrank 3 per cent in the fourth quarter, resulting in a full-year contraction of 6.1 per cent in 2020, advance estimates released by the Census and Statistics Department show.

The six-month repayment holiday started in May last year and was extended in October. The new extension means some companies will enjoy a break in principal repayments of up to 18 months.

“The second extension of the repayment holiday for another six months will help Hong Kong companies survive, as they have been hard hit by the pandemic for more than a year,” said Peter Shiu Ka-fai, a lawmaker representing the wholesale and retail sector. He said businesses will not need support from the banks once Hong Kong’s coronavirus outbreak has been brought under control, and cross-border traffic with mainland China is restored.

Short-term trade loans will be deferred by 90 days, and banks can provide other forms of relief to borrowers if their corporate loans have been extended for 540 days or more. About 100 Hong Kong banks have extended loan tenors and other forms of relief in more than 59,000 cases, involving HK$750 billion in aggregate as of January, the HKMA said.

HSBC, the city’s biggest bank, welcomed the extension. “We will continue to provide assistance to our customers. HSBC has been offering different relief measures for businesses of all sizes to navigate the challenging operating environment,” a spokesman said, added that it had granted HK$230 billion worth of payment holidays or other forms of relief to small businesses as of the end of last year.

https://sg.news.yahoo.com/hong-kong-monetary-authority-orders-124728879.html

 

Category: Hong Kong

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