The Hong Kong Monetary Authority plans to change the city's bank capital rules so that 11 post-secondary institutions and three government-backed park companies are treated as Domestic Public Sector Entities, a step it said will lower banks' capital costs on loans that fund the Northern Metropolis.

The regulator set out the proposal on Tuesday at the third meeting of the Northern Metropolis Financial Advisory Taskforce, which it runs with the Hong Kong Association of Banks. It intends to put amendments to the Banking (Capital) Rules before the Legislative Council in the first quarter of 2027, aiming for them to take effect in the second quarter.

For lenders, the change matters because the amount of capital a bank must hold against a loan depends on how the borrower is classified. Putting universities and park operators in a public sector category would make lending to them cheaper on a bank's balance sheet, which the HKMA said should help those entities raise bank financing and speed up projects in the northern New Territories. For the government, it shifts part of the funding load for a vast development program from the public purse toward the banking system.

University towns move to the center of Northern Metropolis financing

The meeting focused on the Northern Metropolis University Town, the plan to build three higher-education districts at San Tin, Hung Shui Kiu and Ta Kwu Ling. The Education Bureau briefed the group on the positioning of each town, campus development and the related financial arrangements, the HKMA said. Banks and officials then discussed financing options for the area, including loans and public-private partnerships.

The 25 banks in the taskforce said they are committed to providing financial services for the university towns and the industry parks and projects around them, according to the statement. Representatives of the Development Bureau, the Financial Services and the Treasury Bureau and the Innovation, Technology and Industry Bureau also attended.

The taskforce has grown since it was formed in April. At its second meeting in August it had 23 member banks. At that session the Treasury bureau said Legislative Council Finance Committee approvals for Northern Metropolis public works had passed HK$180 billion as of July 2026, and the government noted it had injected HK$10 billion into each of three park companies: Hong Kong-Shenzhen Innovation and Technology Park Limited, Hung Shui Kiu Industry Park Company Limited and San Tin Technopole Company Limited. A six-bank workstream on public-private partnership financing, including Bank of China (Hong Kong), HSBC, Standard Chartered and DBS, was set up to draft financing templates for such projects.

Tuesday's HKMA statement did not name the 11 institutions or the three park companies to be designated.

The rail link that will serve much of the area is moving ahead separately. The government and MTR Corp. this week signed the project agreement for the full Northern Link.

Talent policy tied to the same campuses

The university towns are also central to the government's talent push. In a written reply to the Legislative Council on Wednesday, Secretary for Labour and Welfare Chris Sun called the university town "core" to Hong Kong's first five-year plan and said the government will bring in measures in 2027 to expand post-secondary capacity. Those include more research postgraduate places funded by the University Grants Committee and a gradual increase in the quota of the Hong Kong PhD Fellowship Scheme.

Sun, replying on behalf of the cross-bureau Committee on Education, Technology and Talents chaired by the chief secretary, said more than 320,000 people had come to work in Hong Kong under the various talent admission schemes as of the end of September 2026. He said the government will keep monitoring manpower changes through projections and follow-up surveys and adjust admission arrangements to target specific needs.

The reply listed other measures in the pipeline. The Hong Kong Park in the Lok Ma Chau Loop, which opened at the end of last year, now hosts more than 120 industry, university and research institutions, according to the government. The Innovation and Technology Commission plans to offer about 10,000 STEM internship places over two years, with each intern receiving a subsidy of at least HK$11,000. Universities funded by the grants committee are introducing 27 undergraduate programs related to STEAM subjects or the government's "eight centres" priorities.

The Education Bureau is starting preparations for the 2028/29 to 2030/31 planning cycle for universities, Sun said, with attention on manpower trends in technology and industry.

What banks and investors will watch

The capital rule change is narrow in scope but signals how the HKMA intends to use regulation, rather than only public money, to support the Northern Metropolis.

The commercial effect will depend on details the HKMA has not yet published, including the risk weights that would apply and the list of designated entities. The HKMA's timetable puts the legislative step in the first three months of 2027, with the new treatment in force between April and June.