APR 09 '86 16:38 GIS HK
P.4
In other words if I believe, having considered all relevant factors, that failure to use the Exchange Fund to support a bank may, whether directly or indirectly, adversely affect the exchange value of the Hong Kong dollar, then I am within my powers to act. Indeed I have a duty to do so. I should add that it matters not whether I act by drawing a guarantee on the Fund or by actually utilizing funds drawn from the Fund. Once I have formed my view, then it is my responsibility as Financial Secretary to take appropriate action.
9.
I have formed the opinion, having considered all relevant factors, that the circumstances of Ka Wah Bank were such that its failure would have had an unacceptable adverse effect on the exchange value of the currency of Hong Kong. On this basis I decided that I had the necessary powers to act. Indeed I would be failing in my responsibility if I had not done so.
10.
I think that all Members appreciate that the well being of local banks is a very significant factor in the overall economy. This is true in Hong Kong as elsewhere. Banks are not like department stores. Their collapse presents many difficult issues.
11.
The Commissioner and I are however, also strictly constrained by the stringent secrecy provisions of the Banking Ordinance. These are not unique to Hong Kong, but reflect only normal international practice. They stem in part from the particularly confidential nature of relationships between banks and their customers, and in part from the sensitivity of any information relating to a bank's own affairs. Those Members of this Council in particular who have banking experience will know how important banking secrecy is. One rumour can start a run. One careless comment by the Financial Secretary or the Commissioner of Banking could create
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