THE Hong Kong Monetary Authority (HKMA) is feeling the heat in its efforts to establish a central credit agency in the territory with the Hong Kong Association of Banks (HKAB) backing Hongkong Bank's recent criticism of the proposal. HKAB secretary Guy Priestley questioned the value of having a central database of credit information and argued that participation should not be compulsory, a key plank of the HKMA's original proposal. Mr Priestley said the association, which represents the interests of Hong Kong's 182 licensed banks, would also prefer the market to be able to respond to its own needs. 'We don't see any harm in a central database but we don't see that it adds a great deal of value. 'We don't have a problem with credit quality in Hong Kong.' HKAB's position reflects the views of its larger members, such as Hongkong Bank and Hang Seng Bank, which appear unwilling to share credit data built up over years with their competitors. The two banks have indicated they do not support the compulsory pooling of credit information across the finance industry. HKMA deputy chief executive David Carse said the authority had not decided whether to force all banks to join the bureau, an apparent weakening of its original proposal. In a proposal released in January, the HKMA said there was an increasing need for accurate credit assessment in the territory. This is because of the growth in unsecured lending and it was prepared to 'persuade' institutions to join a fully fledged agency. A central agency would improve the asset quality of Hong Kong's finance industry and therefore benefit the market as a whole, the HKMA said. It would also cut the costs of maintaining several limited databases and enhance transparency of the credit rating industry in terms of privacy concerns. Mr Priestley said banks which had spent years building databases of valuable credit information should not be overlooked. He said customers should be able to choose where their credit information was held. 'If everyone is a member of a central bureau, the customer has no choice,' he said. The HKMA foresaw that the vested interests of some banks might inhibit the establishment of a fully fledged agency because it would be perceived as helping their competitors. 'However, even big banks should benefit from being able to access credit information on the customer base of the rest of the market which is still massive,' it said.