Hong Kong to cut capital charges on loans to Northern Metropolis university towns

Hong Kong’s de facto central bank plans to introduce legislative amendments in the first quarter of next year to lower the capital costs for banks lending to local tertiary institutions, in a bid to speed up development of the university towns in the Northern Metropolis.

Under the proposed changes to the Banking (Capital) Rules, the Hong Kong Monetary Authority (HKMA) will designate 11 post-secondary institutions and three park companies as “Domestic Public Sector Entities”, granting them preferential risk-weighting treatment under the standardised credit risk framework.

“This measure will help lower banks’ capital costs, assist these entities in obtaining bank financing, and thereby accelerate the implementation of Northern Metropolis projects,” the authority said on Tuesday.