HSBC, StanChart halt new loans to two HK projects by Evergrande, brokers say (updated)

The Bank of East Asia

21/07/2021 14:02

(Adds brokers' quote, more details)
    HONG KONG, July 21 (Reuters) - HSBC  HSBA.L  and Standard
Chartered  STAN.L  are declining loans to buyers of property in
two uncompleted Hong Kong residential projects developed by
China's Evergrande Group  3333.HK , three mortgage brokers said
on Wednesday.
    One of the brokers also told Reuters that Bank of East Asia
 0023.HK  had taken a similar step.
    The move by the banks emerged after a Chinese court froze a
$20 million bank deposit of Evergrande this week and a Chinese
city regulator briefly suspended sales from two of its projects.
 urn:newsml:reuters.com:*:nL1N2OV0GG  urn:newsml:reuters.com:*:nL1N2OW052
    The three brokers said the banks had halted lending to two
residential projects in Hong Kong that were scheduled for
completion in August and October, but they said the banks were
still lending for a third, completed Evergrande development.
    HSBC declined to comment. Standard Chartered and Bank of
East Asia did not immediately respond to requests for comment.
    Evergrande said other banks were still approving mortgages
for its off-plan units. It said it expected any decision by Hong
Kong banks, which it did not name, to halt lending to have only
a minor impact. It said its developments were on schedule.
    Ivy Wong, managing director of Centaline Mortgage Broker,
said that, from a bank's perspective, "a mortgage for pre-sold
developments is a loan without the collateral of a completed
property, so the risk is higher."
    Mortgage brokers said only a small number of buyers had been
affected as many applications for the two uncompleted projects
had been previously been approved.
    They said prospective buyers could also seek to change
payment arrangements with Evergrande to make a purchase after
completion.
    Eric Tso, senior vice president of Mreferral, said many 
buyers whose applications were rejected had initially sought to
borrow directly from Evergrande, which has in the past offered
mortgages of up to 90% of the purchase value. 
    "But now Evergrande's not extending mortgages anymore," Tso
said, adding that banks would typically not offer a mortgage
with a loan-to-property value ratio of 90%.
    Evergrande did not comment on whether it was still offering
mortgages.
    

 (Reporting by Clare Jim; Additional reporting by Alun John;
Editing by Tomasz Janowski and Edmund Blair)
 ((clare.jim@thomsonreuters.com; +852 2912 6653; Reuters
Messaging: clare.jim.thomsonreuters.com@reuters.net))