Hong Kong Banking Sector's Exposure to non-bank Chinese Entities

The Hong Kong Monetary Authority (HKMA) today announced the results of its second survey on authorized institutions' exposures to non-bank Chinese entities as at end-December 1998. The first survey was conducted in October 1998 for institutions' exposures outstanding as at 30 September 1998.

According to the survey, total exposures of the banking sector to non-bank Chinese entities at end-December 1998 amounted to HK$297.5 bn, compared with HK$325.4 bn in the previous survey. This represents 4.1% of the total assets of the banking sector. Of the end-December total, on-balance sheet exposures amounted to HK$267.5 bn and off-balance sheet exposures (including guarantees, letters of credit issued on behalf of the Chinese entities by authorized institutions, and replacement costs of foreign exchange and derivatives contracts) amounted to HK$30.0 bn. The local banks' total exposures to non-bank Chinese entities amounted to HK$85.1 bn, a reduction of HK$4.4 bn or 4.9% from the previous survey.

At end-December 1998, the banking sector's exposures to GITIC and its subsidiaries amounted to HK$6.2 bn while exposures to other ITICs and their subsidiaries amounted to HK$39.6 bn.

Compared to the position at end-September 1998, the total exposures of the banking sector to non-bank Chinese entities declined by HK$27.9 bn or 8.6%. The reduction was due to a combination of factors, including repayments and reporting errors made by institutions in the previous survey. After adjusting for reporting errors, the actual reduction was HK$18.3 bn.

The total exposures were spread among 191 institutions, including both local and foreign institutions.

Hong Kong Monetary Authority
6 May 1999

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