Hongkong Bank has broken ranks with its smaller counterparts by refusing to endorse the establishment of an industry-wide central pool of credit information. The bank has stated its opposition to the Hong Kong Association of Banks, and has objected to the obligatory participation in the proposed agency, outlined in a consultation paper by the Hong Kong Monetary Authority (HKMA). A central reference agency will pool customer credit information to be used among participating institutions. The consultation paper, released in January, noted there was compelling evidence to support a fully fledged agency. A Hongkong Bank spokesman said banks should be allowed to decide whether to participate in the agency. 'We are opposed to it because one is obliged to join, according to the consultation paper,' the spokesman said, adding the bank would assess its own credit risk and decide in future whether to join. 'We are in favour of purely voluntary participation,' he said, adding the rationale for setting up a central credit information database was not convincing. The low default and delinquency rate of consumer debts did not warrant such an agency, he said. He said there was already a similar agency, Credit Information Services, founded in 1982 and owned by 25 finance houses. Hongkong Bank is not a shareholder. Although there was no statutory requirement for banks to join the agency, the HKMA said they were encouraged to use its service and contribute to the database. It would 'persuade non-participating institutions to reconsider their position'. 'If necessary, the HKMA would consider whether further action is required to help promote the use of credit reference agencies'. Small banks are relaxed about the obligation. First Pacific Bank managing director James Ng Chi-ming said the bank was supportive of the proposal. 'It would be very costly for us if we do it alone,' he said. Apart from cost, small banks feel the need to pool positive and negative information about customers. Bank of America (Asia) chief executive Samuel Tsien said the debt culture in Hong Kong was slowly emerging. 'The change in consumer behaviour will affect the portfolio quality,' Mr Tsien said. Credit Information Services provides only negative details about a borrower's previous default records. If a customer with no default record applies for credit cards, it is impossible to detect. The HKMA had expected resistance from bigger banks. The consultation paper said: 'Some banks may consider their own customer base is large enough for them to manage the risks and may be unwilling to share their customers' credit information with other banks whose customer base is much smaller.' The HKMA said the customer base of the rest of the market was still massive and would benefit big banks.