Hong Kong asks banks to report distressed Evergrande exposure

(Bloomberg) – Hong Kong’s central bank has asked lenders to report exposure to the heavily indebted China Evergrande group over concerns over potential systemic risks to the region’s financial system, people familiar with the matter say .

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The Hong Kong Monetary Authority surveyed the city’s lenders last week, giving them 24 hours to respond to their financial commitments to China’s most indebted developer, both in terms of loans and derivatives, a said one of the people, asking not to be named due to confidentiality.

This is at least the second time in recent months that the authority has taken an interest in how banks are exposed to Evergrande as financial markets brace for a potential collapse of the developer, which collapses below more than $ 300. billion dollars in liabilities. The company is China’s largest issuer of dollar-denominated high yield bonds, and the bills are coming in from a range of banks and vendors.

In July, the HKMA asked banks to explain their decision to suspend mortgages on unfinished Evergrande real estate projects.

The HKMA did not immediately respond to a request for comment.

Evergrande failed to pay interest owed last week to at least two of its major bank creditors, people familiar with the matter said.

So far, lenders in the region have played down any danger.

HSBC Holdings Plc, Hong Kong’s largest bank, had yet to see a direct impact from the escalating problems in Evergrande, chief executive Noel Quinn told a conference last week.

Chinese listed banks have also sought to appease investors on the risks associated with the deepening crisis. At least 10 lenders told investors earlier this month that they have sufficient collateral for developer loans and the risks are under control. China Minsheng Banking Corp., which topped Evergrande’s list of top banks at the end of last year, said its exposure to the company fell about 15% from June of last year. last year and that most of the loans were for land, properties or projects under construction as collateral.

Singapore’s largest lender, DBS Group Holdings Ltd., which operates in Hong Kong and the mainland, has no exposure to Evergrande and does not view the crisis as a systemic risk to the region’s banking sector, said CEO Piyush Gupta in a Bloomberg. TV interview Monday.

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