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Corporation’s expanded product range after renaming fuels concerns over competitionBanks in Hong Kong are casting a wary eye over the Hong Kong Mortgage Corporation’s (HKMC) plans to develop products that go beyond its mortgage-insurance-focused business.儲存Come January, the government-backed institution will have a new name – Hong Kong Mortgage Credit & Guarantee Corporation – that is also helping to feed concerns within the financial services industry that a well-connected new competitor is waiting in the wings.The HKMC is keen to provide an expanded range of credit and guarantee services to the public after the renaming. One of the firm’s core aims is to “enhance the stability of the banking sector by offering a reliable source of liquidity” under a goal “to promote wider home ownership in Hong Kong”.Bankers are now concerned about where any changes in this complementary role to the industry may be heading.“Business growth at the firm was sluggish and it had to think about including more products and services,” said a senior executive of a bank, who declined to be named. “One day, if the HKMC will provide services and products to individuals, without banks acting as the intermediary, then it will compete with us.”The HKMC carries out its role of providing liquidity to banks by buying loan assets during times when the supply of capital is tightening. But, with the banking system flush with funds, asset purchases by the HKMC from banks have been declining.Set up in March 1997, the HKMC is wholly owned by the government through the Exchange Fund. The firm bought HK$82 million in loan assets in the first half of this year, compared with HK$495 million last year. Assets sales from banks have been shrinking since 2011 as the US Federal Reserve’s quantitative easing boosted the funding pool for lenders.“The HKMC works as a complement of the banks currently, but if it will expand widely in terms of services provided, that might cause some conflicts with banks and we don’t really want tomini storagesee that,” said a local commercial banker, who is monitoring the HKMC closely.The HKMC’s chief executive Raymond Li Ling-cheung has sought to hose down such concerns.“We are not going to compete with the private sector,” said Li, adding that the banks had nothing to worry about. “When there is a need from the society that the private sector is yet to fulfil, we will be there to help close the gap. The new name will reflect the business more appropriately.”Li said he did not expect the firm’s new businesses to contribute any quick returns.Another source familiar with the firm’s accounts said: “The HKMC planned to buy HK$3 billion of loan assets in the business plan this year, but now it seems that it will reach only HK$2 billion.”The source, who declined to be named because the business plan was internal information, said the HKMC completed a purchase worth more than HK$1 billion last month. It also aims to pursue its goal of promoting wider home ownership in Hong Kong and facilitate the growth and development of the debt securities and mortgage-backed securities markets in the city.However, the corporation’s mortgage insurance business has shrunk in line with the slide in property transactions. New loans drawn down under that insurance dropped to HK$7 billion in the first half from HK$10.5 billion last year.The firm’s usage rate, which measures the amount of mortgage-insurance-protected loans out of the total new mortgage loans drawn down in the city, has been declining since it reached 18 per cent in 2009. It fell further to 8 per cent in the first half from 13 per cent a year earlier.The HKMC launched reverse-mortgage services in 2011 and a microfinance scheme in 2012 as part of efforts to enlarge the scope of its offerings to the market, in addition to its financing guarantee scheme for small and medium-sized enterprises. The company forms a partnership with banks when launching such products and services, with banks acting as the platform of sale and the HKMC bearing the risk.self storage