News in connection with property mortgage related credits granted by banks has had the attention of the Monetary Authority of Macao (“AMCM”) recently. All along, property mortgage related credits have accounted for a significant portion in Macao banking business. As the financial regulatory body, AMCM has been keeping a close watch on the development of property mortgage business, maintaining surveillance on the quality of underlying assets, requiring or reminding banks to stay vigilant and remain prudent, on a timely basis. At times, AMCM reviews the methodology of credit risk management to avert undesirable market competition, prevent over expansion of mortgage related credits, and reinforce relevant risk management. Back in February 2008, AMCM rolled out a consultation paper relating to guideline on risk management of property mortgage business. Based on the bedrock of the same paper, AMCM is conducting consultations with banking practitioners regarding supervisory requirements. Reference will be made to a series of events happened in the past in the mortgage market which have caused concern, such as low interest rates, 90% or above loan-to-value ratio. New supervisory guideline will be formulated to set lower loan-to-value ratio and other more prudent requirements. It will help banks in the upkeep of continued stability in the face of market competition.
