Wednesday, 20 April 2011

Fact of the Day: HK$940 billion in Bank Loans

According to a recent article in Economic Times, bank loans in Hong Kong grew 29 percent to HK$940 billion ($121 billion) last year, while the economy only grew 6.5 percent.

Where did all the money go?

The report says 47 percent of the loans were taken out by non-bank mainland customers.

Considering almost half of all bank loans were taken out by mainlanders, these financial institutions can just kiss their money good-bye.

Most mainlanders don't understand the concept that if you borrow money, you have to pay it back.

What's worse is that these customers aren't even regular patrons of the banks, making the possibility of default loans much, much higher.

Why did the banks do this? And why so much money?

And what did they spend the money on anyway? Will we ever see it again?

Yesterday I read a story about how mainland Chinese at auctions hardly ever pay up for the things they successfully bid for. And if they do shell out the dough, it takes several months to pay up which makes auctioneers nervous.

Which is why some auction houses are now demanding deposits from those intending on bidding, making many of them balk.

But really, people have to protect themselves, which brings me back to the bank loans.

If these clients don't pay back the money, then what?

Scary thought.

1 comment:

  1. the bidding war at auctions is one of the ways to boost up the 'value' of the art pieces and reap the media exposure.