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HSBC among five banks teaming up with ECIC to widen insurance coverage to private mainland buyers in boost for Hong Kong exporters
By Jerry
- HSBC, DBS Hong Kong, Hang Seng Bank, Bank of China (Hong Kong) and Bank of East Asia will share their credit assessment of mainland buyers with ECIC as part of new scheme
- ECIC already offers credit insurance to exporters trading with listed mainland firms, which have to disclose their financial information
Five of Hong Kong’s major banks have teamed up with the government-backed Export Credit Insurance Corporation (ECIC) to offer the city’s exporters better coverage for payment defaults by private mainland Chinese firms.
Under the “risk sharing arrangement on domestic risks in the mainland” scheme launched on Monday, one of HSBC, DBS Hong Kong, Hang Seng Bank, Bank of China (Hong Kong) or Bank of East Asia will share their credit assessment of mainland buyers with ECIC when a Hong Kong exporter wants to buy credit insurance or export loan cover for certain mainland buyers.
The bank and ECIC will share the risk equally and split the compensation in case a mainland buyer fails to pay the Hong Kong exporter. The maximum compensation has been capped at HK$100 million (US$12.88 million) per buyer group.
“The mainland has always been an important insured market for ECIC, with the largest credit-limit commitment,” Terence Chiu, ECIC’s commissioner, said on Monday. “The new arrangement will help Hong Kong exporters to participate more actively in the development of the country’s dual-circulation strategy, and strengthen the trade relationship between Hong Kong and the mainland.”
