HKAB drafts guide for dealing with troubled institutions

The Hong Kong Association of Banks (HKAB) will issue guidelines for banks on how to deal with firms with financial difficulties within the next two weeks, chairman Mervyn Davies said yesterday.

The guidelines are designed to provide a standard approach for banks to work in a uniform and consistent manner when corporate borrowers go into difficulties.

Mr Davies said the association had, over the past few weeks, worked closely with the Hong Kong Monetary Authority to study the issues banks would be facing and ways to approach corporate difficulties.

He said when companies experienced financial difficulties, banks tended to pull their credit lines and one of the objectives of the guidelines was to make sure they did it in an orderly manner.

Mr Davies said the association would refer to similar guidelines in Britain and the United States when designing Hong Kong's own version.

He said the guidelines would be 'formal but not legally-binding'.