A spiralling increase in the number of personal bankruptcies in Hong Kong is leaving bankers with a growing mountain of unrecoverable credit-card debt. Driven by an aggressive campaign by banks to grow their credit-card lending, total outstanding credit-card debt in Hong Kong rose to HK$62.05 billion in the last quarter of last year - up 21 per cent from the comparable period a year earlier. In a year of low and negative loan demand, credit cards presented banks with one of their sole growth markets. However, as the year drew to a close, banks were paying a high price on those increased credit-card portfolios. Data released last night by the banking regulator, the Hong Kong Monetary Authority, showed that annualised 'charge-offs' on credit-card loans reached a record 8.27 per cent in the last quarter - up from just 3.71 per cent a year earlier. That meant that banks were writing off loans at double the rate of a year earlier, and over the course of the last quarter wrote off more than HK$1.3 billion in loans they had abandoned hope of ever recovering (HK$5.13 billion on an annualised basis). With the jobless rate rising to a record 6.7 per cent last month, bankers fear the situation is likely to get worse - and ahead of the latest data being released had already promised to renew their campaign to get lawmakers to tighten up bankruptcy laws. The HKMA signalled last night that it supported this campaign. HKMA deputy chief executive David Carse said: 'What is clear, is that there has been an accelerating deterioration in the quality of credit-card portfolios. 'This calls for action on a number of fronts, including review by institutions of their credit-card policies and procedures, as well as consideration of whether the scope for sharing of credit information should be extended.' That was a reference to the banking industry lobby for the establishment of not just a negative-information credit bureau which they can consult at the moment before accepting an application by a customer for a credit card, but also a positive information credit bureau. In a circular to bank managers accompanying the data, the HKMA also urged credit officers to record declarations from credit-card applicants on their other debts. Truthful answers may not be provided, it noted, but if a false statement was recorded, it could be relatively simple to bring criminal charges in the event of a default. Bankers believe that changes to the bankruptcy law - which allows a bankrupt person to be discharged and fully rehabilitated in four years instead of seven - have encouraged people to run up large debts on several cards before declaring bankruptcy to avoid paying the money back. A positive credit bureau would provide early warning of the total debt already raised by an applicant for a new credit card. Unveiling results for last year this week - which saw profits plunging 31.8 per cent mainly because of bad-debt charges - Standard Chartered chief executive for Hong Kong Peter Wong called for urgent action from legislators to allow such a bureau to be established. In the wake of the Standard Chartered result and news on the jobless rate, bank stocks in Hong Kong were heavily sold yesterday as investors anticipated more bad loans eating into bank profits. However, bankruptcy and loan defaults were not just a problem for the industry, said Mr Wong. 'It is also a social phenomenon that is having a major potential impact on Hong Kong's reputation as a leading financial centre in Asia,' he said. Mr Wong said that from 1994 to 1997, 75 bankruptcy petitions were presented by debtors in Hong Kong. In 1998 the figure rose to 492. In 2000 it was 2,721, and by the end of last year was more than 13,000. 'In the absence of data on customers' total credit exposure, banks are working in the dark,' he said. However, opponents of the call for a positive credit information bureau fear that it will threaten privacy of information, and also say that banks have invited the predicament of soaring bad debts onto themselves by aggressively marketing credit cards to higher-risk customers.