HONG KONG (Reuters) - Nine major banks in Hong Kong have agreed to adopt a number of measures to support small and medium enterprises in Hong Kong, the central bank said on Wednesday, as four months of anti-government protests start taking its toll on local businesses.
The banks will “proactively consider” allowing SME customers facing difficulties to extend or reschedule repayments, and will not change the terms of loans to the real estate sector even if landords offer retailers reduced rents, it said.
The Hong Kong Monetary Authority (HKMA), the city’s central bank, announced the measures after meeting the nine banks, which it did not name, under the newly established “Banking Sector SME Lending Coordination Mechanism”.
Hong Kong, which has been rocked by often huge and violent protests against what is seen as Beijing’s tightening grip on the city, is facing its first recession in a decade.
The economy shrank 0.4% in April-June from the previous quarter, and conditions have sharply deteriorated since then.
Retail sales in Hong Kong were the worst on record in August, down 23% from the previous year, the Hong Kong government said earlier this month.
The Chinese-ruled territory’s leader Carrie Lam in her annual policy speech in the legislature on Wednesday offered no direct olive branch to protesters, hoping instead to ease resentment by building public housing.
The HKMA said if banks revised repayment terms to support borrowers for a short period, they would not have to categorise the loan as “non-performing” or set aside funds in case the borrower was unable to repay.
The latest move comes after the central bank on Monday cut the amount of cash that banks must keep as reserves, releasing an extra HK$200-300 billion ($25.5-38.2 billion) into the broader economy.
“We understand that the operating environment of SMEs is very difficult amid the current economic downturn, said Mary Huen, chair of the Hong Kong Association of Banks, an industry group.
“Therefore, banks have introduced various measures to support the SMEs with the government.”
Reporting by Alun John; Editing by Sumeet Chatterjee and David Evans