HSBC, other banks cut HK mortgage borrowers some slack as coronavirus outbreak sends small businesses into tailspin

15-Feb-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Hong Kong’s banks piled in on Thursday to offer additional relief to homeowners and businesses to support an economy hit hard first by months of anti-government protests and now by the coronavirus outbreak.

HSBC and Citigroup were among the latest banks to say they would allow residential mortgage borrowers in Hong Kong to make interest-only payments for up to a year. Homeowners held HK$1.44 trillion (US$185 billion) in mortgages at the end of December, according to the Hong Kong Monetary Authority (HKMA).

DBS, Singapore’s biggest bank, said on Thursday it would extend a series of measures to small and medium-sized enterprises (SMEs) in the city, including allowing interest-only payments on commercial mortgages. Hong Kong is DBS’s largest market outside Singapore and accounted for about 22 per cent of its profit last year.

HSBC, the biggest of Hong Kong’s three currency-issuing banks, also said it was offering relief loans of up to HK$30,000 per person to staff in the aviation, hotel and catering and retail industries, some of the hardest hit sectors of the local economy, as a viral outbreak kept visitors away and sent consumption into a tailspin.

“We hope these measures will bring some relief to those who are under stress from the economic fallout of Covid-19, allowing them to focus on getting through these critical days without having to worry about their finances,” HSBC’s Hong Kong chief executive, Diana Cesar, said.

Nearly 548,000 people were employed in the city’s retail, food and drink and accommodation sectors as of the end of September, according to the most recent government data. Four in 10 hotel workers could lose their jobs in the coming months in the hard-hit hospitality industry, hotel operators have said.

The moves come a week after Bank of China (Hong Kong) became the first bank to roll out relief measures to help Hong Kong’s homeowners and businesses, offering interest-only payments on mortgages and loans to SMEs. Bank of East Asia, China Citic Bank International, Dah Sing Bank, HSBC’s subsidiary Hang Seng Bank, ICBC Asia, and Standard Chartered have since followed with a variety of relief measures.

The HKMA said on Thursday that it held a conference call with the city’s lenders this week to discuss extending support to retail customers and SMEs, whose cash flow pressure has increased significantly in light of the outbreak.

Some landlords and commercial property owners like Henderson Land Development have also stepped in, cutting rents by up to 60 per cent to help retail stores weather the slump in foot traffic, as self-quarantine measures imposed by the local authorities to contain the coronavirus have emptied out shopping centres, restaurants and cafes.

The coronavirus outbreak, which originated in Hubei’s provincial capital, Wuhan, has sickened more than 60,000 people worldwide and led to at least 1,363 deaths at last count, surpassing the severe acute respiratory syndrome (Sars) epidemic in 2003.

To stem the spread of the virus, schools have been closed in Hong Kong and many offices have instructed staff to work from home. All these containment measures are hitting the local economy hard, adding to the woes of a city that had already been driven into its first technical recession in more than a decade, as a result of a year-long US-China trade war and anti-government protests since June 2019.

The city’s lenders offered large-scale relief measures to SMEs and mortgage holders during the Asian financial crisis in 1998 and during the Sars epidemic.

Separately on Thursday, ICBC Asia it would carry out additional measures to help small businesses, including waiving fees and allowing SMEs to make interest-only payments on commercial mortgage loans for six months and to extend their loan repayment cycles. It also will offer special financing loans to medical device makers and other companies supporting efforts to combat the outbreak.

In addition to mortgage relief, HSBC also said on Thursday it would provide interest and fee relief for missed payments by credit card and personal loan customers who are struggling financially.

Citi said credit card customers could apply for a waiver of late charges and it would offer a one-month maturity extension to commercial bank clients for existing and new trade import loans, and the flexibility to convert a portion of up to HK$10 million of unused credit lines into a revolving line of credit for six months.

DBS also said on Thursday it would extend the maturity of import trade credit facilities by as much as two months. It would also waive fees for certain SME customers and offer interest rate concessions to customers producing or supplying medical devices and protective gear to help treat the outbreak.


Category: Hong Kong

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