HSBC Malta has set up a €100 million credit fund to beef up liquidity of local businesses as they brace themselves to face the economic impact of the global financial crisis.
Business leaders welcomed the initiative, saying the launch of the fund is well-timed to help entrepreneurs at these "very trying times".
The fund represents "new money", over and above what HSBC would normally expect to lend in the prevailing business environment and will be funded from its own resources, the bank said. When asked why the bank felt the need to launch the fund, a spokesman explained that HSBC envisaged that, due to the financial crisis, there would be an increase in demand for such credit in the New Year.
Businesses were experiencing a gap in their working capital as debtors dragged on to pay up and creditors chased them for funds. The €100 million fund would help fill that gap and help entrepreneurs, with fundamentally sound businesses, to weather short-term shocks caused by the downturn, the bank said.
The initiative forms part of the $5 billion fund (about €3.5 billion) made available as working capital in response to the crisis by the HSBC Group globally. The fund will be available immediately and, while it will apply to all businesses, money will be allocated on a case-by-case basis according to the bank's normal lending criteria.
"The extra €100 million reflects our willingness to continue lending responsibly to viable businesses needing working capital... Businesses are the lifeblood of the Maltese economy and it is their continued success that will provide a stimulus to create economic growth," HSBC's head of commercial banking, Richard Cottell, said.
The director general of the Chamber of Commerce and Enterprise, Kevin Borg said it was "very positive news" but one must first see the details. "It comes at a time when the chamber is encouraging businesses to capitalise on the international storm and, for this to happen, there has to be this type of liquidity and working capital," he said.
FOI president Martin Galea said the fund indicated that the bank was looking to be there for business to help it through this period. "Lean times will pass and it is imperative for the banks to take a longer term view to tide businesses over," he said.
The US Federal Reserve yesterday entered uncharted policy territory as it chopped its benchmark interest rates to as low as zero and pledged to use "all available tools" to turn back a deepening recession. In a surprise and historic move, it lowered its target for the benchmark federal funds rate to a range of zero to 0.25 per cent, a record low, from one per cent.