The coronavirus pandemic might have hit the city’s economy hard, but it also brought to the fore “the Hong Kong spirit”, with businesses quickly adapting to meet a new normal, according to an executive at Bank of East Asia (BEA).
Half of the loans at the 101-year-old family-run bank recently approved were borrowed by corporate clients looking to change their business models, with the pandemic disrupting how people work, dine and travel.
About 1,800 of its customers have applied for a total of HK$1.3 billion (US$167.7 million) in government guaranteed loans since the scheme started in April. The government is offering between 80 per cent and 100 per cent guarantees for loans made to small and medium-sized enterprises (SMEs).
“We found that many of our customers were very positive minded. While the pandemic has hurt their business, it is also a game-changer, letting these companies rethink their business models to meet the new way in which people work, shop and dine,” said Thomas Tsui Chun-man, the general manager and head of corporate banking at BEA.
“This is the real Hong Kong spirit ” our businessmen are quick to make a change to meet the new environment.”
The pandemic and resulting containment measures have had a huge impact on retailers, restaurants and tourism globally. Hong Kong’s economy shrank 8.9 per cent in the first quarter this year for its worst slump since records began in 1974. The city’s unemployment rate rose 5.9 per cent in the March to May period, with 230,400 people unemployed, its worst decline since the 2008 financial crisis.
Thomas Tsui Chun-man, the general manager and head of corporate banking at Bank of East Asia. Photo: Jonathan Wong alt=Thomas Tsui Chun-man, the general manager and head of corporate banking at Bank of East Asia. Photo: Jonathan Wong
The loans guaranteed by the government are aimed at helping local companies ” small listed companies as well as 340,000 SMEs ” cope with the economic fallout of the pandemic. Many of them, however, are not short of cash.
“About half of our borrowers wanted to use the money to move forward, to change their business models to prepare for post-pandemic demand,” Tsui said.
A bank customer that makes clothes has turned to making masks, while another clothes manufacturer decided to make underwear after it found people were more focused on these garments during the pandemic.
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A restaurant operator took out a loan to expand its takeaway and delivery services. A machines manufacturer borrowed HK$4.5 million to produce robots that will deliver meals to patients in hospitals. A food retailer took a loan to expand its frozen foods section, while others used the money to upgrade their online shopping services.
Peter Shiu Ka-fai, a lawmaker representing the wholesale and retail sector, said the loans as well as the HK$10,000 government payout to all 7 million of Hong Kong’s permanent residents from July 8 will prove to be helpful. During the Severe acute respiratory syndrome (Sars) outbreak in 2003, there were very few bad debts arising from government guaranteed loans. “The relief measures and the cash payout will encourage people to spend to help retailers and restaurants recover,” he said.
Besides the new loans, the bank has also given 1,600 existing customers a six-month repayment holiday for a combined HK$20 billion worth of loans, Tsui said.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.