The Monetary Authority will consider the need for appropriate supervisory measures in case of any deviation from the 70% loan-to-value ratio and if an authorised institution fails to properly justify the deviation.

This was the message from Secretary for Financial Services & the Treasury Professor KC Chan in response to questions in the Legislative Council today.

"In case of any deviation from the 70% ratio, the authority will seek to understand from the authorised institution concerned more details about the deviation. If the institution fails to properly justify the deviation the authority will assess the implication for the effectiveness of the risk management system adopted by the institution," Prof Chan said.

"To the extent the risk management standard of the institution concerned is called into question the authority would consider the need for appropriate supervisory measures to help ensure the institution rectifies the weaknesses identified."

Click here for Prof Chan's full response.