HSBC and Bank of China (Hong Kong), two of the largest margin lenders for Ant Group’s suspended IPO in Hong Kong, will pocket up to HK $ 25 million ($ 3.2 million ) interest income, after choosing not to waive interest charged by clients.

Ant has been reimbursing investors in Hong Kong since Wednesday, after its mega-double listings in the city and on the Shanghai Star Market were stopped by Chinese regulators. Friday he will come back a record HK $ 1.3 trillion for 1.55 million retail investors. But those who took out margin loans to buy the shares must pay HK $ 60 million in interest, brokers estimate.

The lenders, two of Hong Kong’s three note-issuing banks, will take the biggest cut, having provided half of the HK $ 500 billion in margin financing offered by all of the city’s banks and brokers. Small banks and some stockbrokers, however, have waived interest charged to customers.

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The decision not to join comes as HSBC and BOCHK face increasing pressure on their profit margins. a prolonged period of historically low interest rates, which is unlikely to change until 2023, as central banks seek to revive economies hard hit by the coronavirus pandemic.

“Customers are repaid in accordance with our IPO loan terms,” said an HSBC spokesperson. The bank provided HK $ 150 billion in margin loans at an interest rate of 0.48 to 0.88 percent for five days, giving it an income of between $ 10 million and $ 18 million. Hong Kong dollars. BOCHK has loaned around HK $ 100 billion at 0.5 percent.

“I am very disappointed, as I borrowed HK $ 16 million from HSBC to underwrite Ant’s IPO. Now I can’t get shares, but still have to pay interests, ”said Kenia Cheng, a Hong Kong businesswoman.

The bank was considering switching to a higher paying model for some deposit clients – individuals and businesses – as it sought to deal with the low interest rate environment, said Ewen Stevenson, chief financial officer of HSBC, during of his Presentation of third quarter results on October 27. The bank’s pre-tax profit fell 36% to US $ 3.07 billion in the third quarter on an annual basis as low rates weighed on its results, said Noel Quinn, chief executive of HSBC. Its net interest income fell 14.8 percent in the quarter to US $ 7.57 billion.

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Small banks, such as Dah Sing Bank and CMB Wing Lung, as well as major stockbrokers, such as Bright Smart Securities, Phillip Securities and Futu Securities, have waived some or all of the fees and interest owed. . Valuable Capital, a brokerage firm, has gone a step further and is offering HK $ 50 cash coupons, to be used if Ant relaunches its IPO at a later date.

“Many brokers are waiving the interest on margin loans and fees for their clients. It will cost them money, but it will also help them grow their brand and improve their relationships with clients. investors to borrow from brokers. [in the future]Said Christopher Cheung Wah-fung, a financial services lawmaker who is also chairman of Christfund Securities. Christfund does not offer margin loans for the IPO.

In mainland China, although Ant does not yet have information on redemptions, buyers of IPOs can get paid in full to issuers and return interest to issuers, in accordance with the Securities Law. movable property of the country. Last Friday, more than 701,000 retail investors won a lottery in Shanghai to subscribe for 500 of Ant’s IPO shares on the mainland at 68.8 yuan (US $ 10.3) per share, for a total of 24 , 1 billion yuan.

In 2015, 10 companies to be listed on the Shanghai and Shenzhen stock exchanges, including Beijing Sanfo Outdoor Products, Thunder Software Technology, and Anji Foodstuff, were asked by regulators to reimburse investors. The companies had completed their fundraising and were on track to make their business debut. The refunds were made to investors’ bank accounts, brokers said.

This article was originally published in the South China Morning Post (SCMP), the most official voice reporting on China and Asia for over a century. For more SCMP stories, please explore the SCMP application or visit the SCMP Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.