With the sluggish economy in mainland China’s banking and property system, with bank depositors unable to withdraw their money, and home buyers boycotting mortgage repayments to banks, Hong Kong banks’ loans to the mainland are affected and its banks face increased risks.
“The impaired loan ratios for Hong Kong banks’ mainland loans will likely further rise this year in light of China’s economic slowdown,” said Helen Zhang, an economic analyst, in a July 14 report by the U.S. credit rating agency Moody’s.
The majority of loans banks make outside of Hong Kong are in mainland China, accounting for 5-35 percent of its overall loan book. It is estimated that real estate loans make up at least 20-30 percent of the Hong Kong banks’ lending in mainland China….