The Monetary Authority, Association of Banks and Deposit Taking Companies Association announced today the establishment of a commercial credit reference agency in Hong Kong to be operated in third-quarter 2004.

The agency will collect the credit data of small and medium-sized enterprises and make the information available to authorised institutions.

Authority Chief Executive Joseph Yam said: "The agency will bring about significant benefits to the banking industry's credit risk management, thereby enhancing the safety and soundness of the banking system."

The agency will cover only the SME customers of authorised institutions. The consent of each SME will be required before the institutions can pass credit data on it to the agency.

Association chairman Raymond Or said: "The agency will help meet the needs of both lenders and borrowers. It will help creditworthy borrowers gain better access to loans more quickly and at more competitive prices."

Data gathered by the agency will cover only credit data, such as the total number of credit facilities an SME has obtained from lenders, the limits on these and information about defaults on loans.

Information about the company assets or the personal wealth of the owners will be excluded. Lenders will only use the data in relation to the grant, review or renewal of an SME's credit.