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Press Release 16 October 2019

HKAB Welcomes Establishment of SME Coordination Mechanism

(16 October, 2019) The Hong Kong Association of Banks (HKAB) welcomes the establishment of a coordination mechanism established by the Hong Kong Monetary Authority (HKMA) and the banking industry to strengthen support for small and medium-sized enterprises (SMEs). The HKAB is pleased to collect opinions from the industry with the Hong Kong Mortgage Corporation Limited (HKMC) via this mechanism and facilitate the industry to jointly enhance and implement various measures to support SMEs. 

The first meeting was held today after the establishment of the mechanism. The participants proposed and agreed to adopt a number of measures, including making good use of the countercyclical buffer (CCyB) capital released by the HKMA earlier to support SMEs; proactively considering allowing customers to extend or restructure their repayment period, as well as exploring further room to introduce more concessionary measures to alleviate the financial burden of SMEs, etc. Meanwhile, the industry also agrees that banks will adopt a more accommodative approach when dealing with SMEs' financing needs without compromising their own credit policies and prudent risk management principles. 

The HKAB believes that the mechanism will help enhance the communication between the industry and stakeholders and facilitate the industry to better understand the relevant business details and explore ways to effectively support SMEs. For example, the HKMA clarified at this meeting that if a bank proactively revises the repayment terms based on commercial principles to support a borrower with overdue payments for a short period, the loan to the borrower does not fall within the definition of 'rescheduled loan' and the bank does not need to categorise the loan as non-performing nor make any provision. 

Mary Huen, the Chairperson of the HKAB says: "The banking industry has been proactively communicating with SMEs since the start of the year. We understand that the operating environment of SMEs is very difficult amid the current economic downturn. Therefore, banks have introduced various measures to support the SMEs with the government. We will continue to maintain close communication with SMEs and provide services that meet their actual needs. We hope to stand shoulder to shoulder with our SME clients to ride out the current difficult times." 

The Hong Kong Association of Banks

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