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HSBC

Follow the technology: HSBC offers special loans for tech-savvy small enterprises

In October, bank loans for use in Hong Kong rose 23.9pc year on year, according to figures released last week by the Hong Kong Monetary Authority

PUBLISHED : Tuesday, 12 December, 2017, 8:03am
UPDATED : Tuesday, 12 December, 2017, 12:53pm

HSBC has launched a new loan product designed specifically for digital-savvy small- and medium-sized enterprises (SMEs) in Hong Kong, amid the government’s ongoing push to drive greater digitisation in the city and growing competition such customers among lenders.

Hong Kong’s biggest bank claims it is the first of its type to be offered in Hong Kong, adding that interest rates on the new loans would start from 0.33 per cent a month

The new loan will be available to SMEs based in Hong Kong that operate a digital- and technology-related business, or engage in commercial use of digital adaptation. The bank said these could include e-commerce, big data artificial intelligence or biotechnology.

Companies based in Hong Kong Science and Technology Parks and Cyberport that apply for the new loan will also have a one per cent handling fee waived, as a further incentive.

Carrie Lam, Hong Kong’s Chief Executive, outlined a number of policies to encourage innovation in her maiden policy address in October.

Tax breaks and R&D touted to keep Hong Kong competitive as Carrie Lam delivers policy speech

These included investing HK$700 million (US$89.67 million) on “smart city” projects, doubling spending on research and development, and proving tax breaks for companies’ own spending on R&D.

“Technology and innovation are increasingly important drivers of Hong Kong’s economy today and critical to its long term future,” said Terence Chiu, HSBC’s head of commercial banking.

“Local SMEs are used to adapting to a changing market environment. They will be able to enjoy first-mover advantage to unlock the growth potential of digital technology.”

Local SMEs are used to adapting to a changing market environment. They will be able to enjoy first-mover advantage to unlock the growth potential of digital technology
Terence Chiu, HSBC’s head of commercial banking

Nonetheless, sceptics have suggested that Hong Kong is still not doing enough to develop innovative companies.

Last month, Fanny Law Fan Chiu-fun, chairwoman of the Hong Kong Science and Technology Parks Corporation welcomed the policies to drive innovation in Hong Kong, but said more needed to be done.

“Some foreign investors have told me in the past that Hong Kong people seem easily satisfied … I have always said we need to dream big and tolerate mistakes,” she said.

Law said it would take years for Hongkongers to change their deep-rooted conservative mentality and embrace risks while acknowledging the benefits of innovation and technological development.

HSBC’s launch of the new types of loans comes at a time when banks in Hong Kong are lending more, but competitive pressures are forcing rates to remain low.

In October, banks’ loans for use in Hong Kong rose by 23.9 per cent year on year, according to figures released last week by the Hong Kong Monetary Authority. Economists at OCBC Wing Hang said that this was due to improved corporate sentiment about a global recovery.

Nonetheless, while there is high demand from companies for loans, banks have not been able to raise their interest rates by as much as they would have liked, even though they have to pay more to borrow themselves.

Last week, a report from Moody’s Investor Service said that competition was the reason for this pressure on banks’ margins.

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