Some banks in Hong Kong are reportedly rethinking their original decision to halt mortgages for unfinished projects by debt-ridden Chinese property giant Evergrande after being questioned by the local regulator.
At least seven banks originally said they would no longer offer mortgages for two of China Evergrande’s uncompleted projects in Hong Kong.
They include HSBC, Bank of East Asia, Standard Chartered, Hang Seng Bank, China Construction Bank (Asia), ICBC (Asia) and Bank of China (Hong Kong).
But some banks are considering to reverse the halt and resume mortgages for Evergrande’s uncompleted projects in the city after the Hong Kong Monetary Authority (HKMA) reportedly questioned their original decision last Thursday.
HKMA Questions Reopen B/S
According to a «Bloomberg» report, the HKMA asked banks to explain the situation and questioned whether staff and homebuyers have been notified about halts to new loans for Evergrande’s two completed residential projects.
Shortly after, reconsiderations of the halt were being made at HSBC and Bank of China (Hong Kong), the report added. Other banks have also since publicly communicated that they would continue to accept mortgages such as Hang Seng and Bank of East Asia.
An HKMA spokesperson said that the banking regulator would communicate with banks on different topics regularly but did not comment on specifics as a matter of policy.
Market Interpretation
The latest development has reportedly stoked speculation that regulators in China and Hong Kong will take steps to prevent confidence loss in Evergrande.
One bank official interpreted HKMA’s questions as «a subtle request» to rethink the mortgages halts, according to «Bloomberg». Separately, a report by local media «The Standard» said that unnamed market insiders viewed HKMA’s approach as «hard», adding that it may affect the image of banks.
Market worries about Evergrande’s financial health and the outlook for its more than $300 billion in liabilities have risen since September last year when a leaked document claimed that the property firm sought government assistance to avert a cash crunch. In response, Evergrande chairman and China’s third-richest man Hui Ka-yan called the leak «fabricated and pure defamation» in an exchange filing.
Non-Financial Troubles
In addition to financial troubles, the Chinese property giant is currently embroiled in a scandal involving a senior executive from Evergrande.
Chen Fen, 37, has been accused of attempted rape which allegedly occurred after he violated Covid-19 rules by attending a hotpot dinner with nine guests, including three senior Hong Kong officials. The maximum penalty for rape is life imprisonment.
