Briefing by the Secretary for Financial Services and the Treasury on the Chief Executive’s 2019 Policy Address
Development in cross-boundary financial services
Mr CHAN Chun-ying expressed disappointment that there were few initiatives relating to the development of financial services industry in the 2019 Policy Address Supplement. He enquired about the progress in the development of cross-boundary financial services between Hong Kong and the Mainland, in particular the timetable for implementing the initiative relating to cross-boundary attestation service for Hong Kong residents to open Mainland personal bank accounts in the Greater Bay Area remotely and the provision of cross-boundary mortgage services by Hong Kong banks in the Greater Bay Area.
SFST advised that there was progress in promoting facilitation measures relating to the daily lives of people in the Greater Bay Area including cross-boundary payment services by individual e-wallet operators and the pilot services of opening bank accounts remotely by Hong Kong residents. The Government would continue to explore measures to meet Hong Kong people’s demand for cross-boundary wealth management services.
Development in financial technologies
Mr CHAN Chun-ying noted that to foster the development of Fintech, Cyberport would strengthen the provision of Fintech-related training for in-service financial practitioners and an in-town event space (tentatively named “Fintech @ Gloucester”) would be established for Fintech related companies and institutions to connect and exchange ideas. He asked how the Administration would attract Fintech talents and experts to Hong Kong.
SFST advised that local universities and tertiary institutions had been offering various courses and programmes on Fintech, and there were measures in place to attract and retain talents. It was observed that about one-fourth of those working in Cyberport were from overseas and the Mainland.
Briefing on the work of Hong Kong Monetary Authority
Development of financial services
Mr CHAN Chun-ying declared that he was a consultant of a local bank. He enquired about the progress of HKMA’s follow-up actions to the incident happened in early 2019 concerning online security of consumer credit data maintained by the TransUnion Limited, particularly the review on the need of introducing more credit reference agencies for the banking industry in order to cope with the development of the credit market.
DCE(B)/HKMA advised that the Hong Kong Association of Banks (“HKAB”) had agreed in principle the proposal of introducing more than one credit reference agency (“CRA”). HKMA would discuss with HKAB on the implementation details, including how banks could handle their credit enquiries properly with different CRAs.
Revised Mortgage Insurance Programme and the property market
Mr CHAN Chun-ying enquired about the proportion of applicants under MIP who were first-time homebuyer, i.e. who had not held any residential properties before.
DCE(B)/HKMA said that in the first few days after the launch of the MIP amendments, some banks enquired about certain implementation details, such as the need to conduct stress tests for the bank exposure portion of MIP loan applications. HKMA had already clarified the issues raised by banks. Generally speaking, the maximum debt-to-income (“DTI”) ratio for all MIP loans was set at 50%, and borrowers had to meet the stressed DTI ratio. Even if borrowers could not meet the stressed DTI ratio, they would still be eligible for MIP loans up to the LTV ratio, subject to an additional adjustment to the premium based on relevant risk factors.
The Banking Sector SME Lending Coordination Mechanism
Mr CHAN Chun-ying welcomed the establishment of the SME Mechanism. He noted that one of the measures under the SME Mechanism was for the banks to make good use of the reduction in CCyB requirement to support SMEs, and enquired how HKMA would assess whether banks had actually implemented the measure.
CE/HKMA said that to assess the effectiveness of the measure, HKMA would monitor changes in SME loans made by banks through regular reports and statistics provided by banks. DCE(B)/HKMA added that the SME Mechanism was expected to hold meetings regularly to review parameters such as the amount of SME loans made by banks.
The Exchange Fund
Pointing out that EF’s investment in alternative assets held under the Long-Term Growth Portfolio (“LTGP”) had been gaining relatively high annualized internal rate of return in recent years, Mr CHAN Chun-ying enquired whether HKMA would consider increasing EF’s investment under LTGP.
CE/HKMA said that LTGP had achieved a relatively high investment return in the past 10 years, and there was still room to increase EF’s allocation to LTGP. However, it should be noted that LTGP primarily invested in alternative assets in private markets, which in general had longer investment period and lower liquidity. Therefore, HKMA would need to strike a proper balance in asset allocation to ensure EF maintained sufficient liquidity.