HSBC and StanChart suspend loans for two Hong Kong projects from Evergrande, brokers say

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HONG KONG (Reuters) – HSBC and Standard Chartered are waiving loans to home buyers on two unfinished residential projects in Hong Kong developed by China’s Evergrande Group, three mortgage brokers said Wednesday.

One broker also told Reuters that the Bank of East Asia has taken a similar step.

The banks’ move comes after a Chinese court this week froze a $ 20 million Evergrande bank deposit and China’s city regulator briefly suspended sales of two of its projects.

The three brokers said banks have suspended lending for two residential projects in Hong Kong that were due to be completed in August and October, but they said banks are still lending to the third, completed Evergrande project.

HSBC declined to comment. Standard Chartered and Bank of East Asia did not immediately respond to requests for comment.

Evergrande said other banks are still approving mortgages for its projects under construction. He said he expects any decision by Hong Kong banks to stop lending, which he did not name, will have only a marginal impact. He said his developments are on schedule.

Ivy Wong, managing director of Centaline Mortgage Broker, said that from the bank’s point of view, “mortgages for pre-sold projects are a loan without collateral on finished real estate, so the risk is higher.”

Only a small number of buyers were affected, according to mortgage brokers, as many applications for two unfinished projects had been approved in the past.

They said potential buyers could also try changing their payment terms with Evergrande in order to make a purchase after completion.

Eric Tso, senior vice president of Mreferral, said many of the rejected buyers initially sought to borrow directly from Evergrande, which has offered mortgages up to 90% of the purchase price in the past.

“But now Evergrande no longer provides mortgages,” Tso said, adding that banks generally do not offer mortgages with a loan-to-property ratio of 90%.

Evergrande did not comment on whether it still offers mortgages.

Claire Jim reporting; Additional Report by Alun John; Edited by Tomasz Janowski and Edmund Blair



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