As the announcement of HSBC's full privatisation of Hang Seng, Hang Seng's role is going to be redefined. On the other its brand name will continue to operate independently. But its lending policies will surely have to align with HSBC's rigorous loan underwriting policies. However, the act of write-off bad debts has become a top priority for Hang Seng before the implementation of the privatisation.
To attract mortgaged loans, Hang Seng had been adopting a loose lending policy for commercial and shop investors in the past few 
years. During the latest market downturn in commercial and shops market, many investors, who were highly relied on second mortgage or home equity line of credit, have become seriously insolvent. With the end of the easing mortgage policy, this will put unprecedented pressure on Hang Seng to collect overdue payment on non-perform loans. Indeed, the judgement day for commercial and shop investors is coming.
To response banks' gentle reminders of repayment loans, investors have accelerated to sell their premises at the bargain prices. As a result, the downward pricing of commercial property will be persistently in the coming months and trigger a new wave of rock-bottom sales across the market. However, no matter how hard the investors try to sell, a sizeable number of them will be unable to reduce their debts through sell-off their mortgaged premises. Therefore, the banks will force them to liquidate.
HSBC and Hang Seng Bank are the leading financial institutions of property mortgage market in Hong Kong. Nonetheless, the mounting pressure to reduce bad debts will predictably suspend new application of loans for commercial and industrial properties. This will make loan application extremely difficult for potential buyers. Under this condition, sellers must slash prices further to attract strong self-use buyers. Consequently, the nightmare for the insolvent landlords is just at the beginning.
