Some Hong Kong banks refuse mortgages for China Vanke’s Le Mont project in Tai Po

Some banks in Hong Kong are not extending mortgages for China Vanke’s Le Mont project due to be launched in Tai Po, another setback for the embattled mainland Chinese developer battling a liquidity crisis. Standard Chartered, one of the city’s three currency-issuing banks, and Chong Hing Bank were not accepting mortgage requests from potential homebuyers at Le Mont, according to property agents. Standard Chartered declined to comment. Chong Hing Bank said in a statement that it mainly considers the mortgaged property’s value and quality together with the applicant’s repayment ability when evaluating mortgage loan applications. Some potential buyers were also told by both these banks that they would not provide loans for the Le Mont project. The position taken by Standard Chartered and Chong Hing Bank marks a fresh blow for Vanke. The one-time second-largest developer on the mainland faces nearly US$5 billion in debt maturities this year worsened by a years-long property downturn at home. Vanke is also likely to post a record net loss of 45 billion yuan (US$6.2 billion) for 2024. “Banks are assessing the likelihood of a Vanke default [and whether] it is able to complete the project,” according to a lawyer who asked not to be named. “For presale units, banks are concerned if the money can be recouped after granting mortgages to buyers.” Meanwhile, Hang Seng Bank, HSBC and Bank of East Asia were yet to confirm mortgage requests, agents said. Le Mont started accepting registrations of interest last week for the 403-flat project, which is expected to be completed in July 2026. The company announced on Tuesday that it would offer 228 units for sale on Saturday. The lawyer said that the proceeds from the flat sales would not directly go to Vanke but to an escrow account of its representative law firm to repay construction costs and loans. If the sales do not go as expected, the onus would be on Vanke to find funds to complete the project, he added. “Therefore, some banks are refusing to grant mortgages due to credit risks.” Still, other banks confirmed they would offer mortgages for would-be buyers at Le Mont, according to Vanke Hong Kong, a unit of the mainland developer. “Le Mont’s first price list was uploaded on March 6,” a Vanke spokesman said. “Normally, banks can only start the approval process after the price list is released.” Bank of Communications and OCBC Hong Kong Bank confirmed that they would offer mortgages, the spokesman said, adding that “other banks will also complete their approvals throughout next week”. Bank of China (Hong Kong) and ICBC (Asia) also said they would extend mortgages for the project. “The bank processes mortgage applications in accordance with stringent internal approval procedures, which include a thorough assessment of risks and the applicant’s affordability,” ICBC said in a statement. Each bank has its own policies for mortgage applications, according to Eric Tso Tak-ming, chief vice-president of mortgage broker mReferral. “For smaller or non-local developers, banks will [only] accept completed projects, while a few will accept presale projects,” he said. Vanke last week unveiled the prices of the first 81 flats at Le Mont, which range from HK$2.38 million (US$306,000) to HK$10.38 million after discounts of as much as 16 per cent. The flats on offer range from 248 sq ft to 873 sq ft. These comprise eight studio units, 30 one-bedroom flats, 35 two-bedroom units, six three-bedroom flats and two four-bedroom units. Vanke recently secured a funding guarantee from its main state-backed shareholder, Shenzhen Metro Group, to repay its debt. Shenzhen Metro, which holds a 27.2 per cent stake in China Vanke, signed a three-year agreement with the developer to provide secured loans of up to 2.8 billion yuan, according to a filing to the Hong Kong stock exchange on February 10. Vanke will provide assets worth up to 4 billion yuan as collateral to Shenzhen Metro via an 18 per cent stake transfer in its property management unit Onewo. The facility would be used to repay and settle the developer’s outstanding debts, according to the filing. The loans would be repaid on a quarterly basis. Fitch Ratings in January downgraded China Vanke’s long-term foreign and local-currency issuer default ratings to B- from B+ because of the company’s deteriorating cash flow and sales outlook. Additional reporting by Yulu Ao

Some Hong Kong banks refuse mortgages for China Vanke’s Le Mont project in Tai Po

Vanke Hong Kong, a local unit of China Vanke, says some lenders, including Bank of Communications and OCBC Hong Kong, will offer mortgages