17 January 2020

HKMA urges banks to ensure loan-deposit tenor match, paper says

The Hong Kong Monetary Authority (HKMA) has urged local banks to ensure adequate matching in deposit and loan tenors to maintain stable source of funding, Ming Pao Daily News reported Monday, citing people familiar with the matter. Banks that recorded more than 20 percent growth in outstanding loans this year are required to maintain a certain level of “stable funds”, including funds from parent company, the lenders’ own capital and certificates of deposit, to match the loan growth, the report said. During the first eight months of 2013, outstanding loans in Hong Kong were up 18.8 percent, driven by mainland-related loans. The latest directive is expected to help reduce the impact from turbulence in global financial markets while protecting the local economy, the HKMA is reported to have said. A banking professional told the newspaper that while the move is unlikely to push up interbank rates, it could however drive the overall cost of capital higher. Banks may lift lending rates if the rapid loan growth continues next year, the source was quoted as saying.

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