2 May 2003
The Chief Executive
All Authorized Institutions
Dear Sir / Madam,
The impact of atypical pneumonia
While the recent trend in the number of cases of atypical
pneumonia (AP) is encouraging, the outbreak is having adverse
effects on the Hong Kong economy and on both corporate and personal
customers of authorized institutions (AIs).
During this difficult period, the HKMA believes that it will be
in the best long-term interests of the economy, the banking
industry and its customers, if AIs adopt a supportive attitude
towards customers experiencing financial stress as a result of the
AP outbreak.
The HKMA therefore strongly endorses the recent statement on AP
by the Chairman of the Hong Kong Association of Banks that member
banks should adopt an accommodative and flexible approach when
dealing with their customers' financial arrangements. This approach
is one that we recommend to all AIs.
In practice, this means that AIs should adopt a sympathetic
attitude towards requests for temporary relief arrangements made by
borrowers who have encountered repayment difficulties as a result
of AP, such as payment of interest only for a mutually agreed
period of time. Individual cases will of course need to be assessed
on their merits, but in general a proactive approach towards
temporary relief arrangements will help to mitigate the financial
consequences of AP, including the risk of rising bankruptcies.
It is important that AIs should establish a clear policy on how
to deal with financial difficulties of customers caused by AP and
that this policy should be communicated to all relevant staff,
including account officers and those involved in handling problem
credits. This is so that the institution adopts a consistent
approach in dealing with its customers. It is also important that
customers should know how to approach AIs in order to discuss their
financial problems and arrive at a mutually acceptable solution.
The call centres which some AIs have established for their personal
customers with negative equity may also be an appropriate means for
customers affected by AP to make contact with their AI.
The HKMA will continue to monitor the impact of AP on AIs and
their customers, including the extent to which they have entered
into AP-related temporary relief arrangements.
I am copying this letter to the Chairman of the Hong Kong
Association of Banks and the Chairman of the Deposit-taking
Companies Association.
Yours faithfully,
D T R Carse
Deputy Chief Executive
- c.c.
- Chairman, The Hong Kong Association of Banks
Chairman, The Deposit-taking Companies Association
