HK banks cut prime lending rates

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HONG KONG, Nov 8 (AFP): Five Hong Kong banks announced yesterday cuts in their prime lending rates, amid growing fears over the state of the economy.
The move by HSBC, Hang Seng, Standard Chartered, Bank of East Asia, and Bank of China Hong Kong, was made possible by the lowering of interbank rates, the result of repeated injections of liquidity by the Hong Kong Monetary Authority into the banking system in recent weeks.
In a surprise move, HSBC announced minutes before the close of the stock market's morning trading session that it would lower its prime lending rate from 5.25 per cent to 5 per cent from Monday.
But it will not change the rate for Hong Kong dollar savings, it said.
"This can lighten the burden of flat-owners who have taken out a mortgage, as well as small and medium enterprises who have used their properties as security," Peter Wong, executive director of HSBC, told broadcaster Cable TV.
"We can also stimulate the economy of Hong Kong." The move was matched by the other four banks, which announced in the afternoon that they would also lower their rates by 25 basis points.
It was the first lending rate cut by the banks since March, although the US Federal Reserve has already reduced its key interest rate three times.
The Monetary Authority, the city's de facto central bank, Thursday unveiled two new measures designed to make it easier for businesses to borrow money in anticipation of a year-end tightening of credit.
It will extend the maximum loan period for collateralised lending to banks from one to three months, and charge interest below interbank lending rates.