P.8
APR 09, '86 16:40 GIS HK
when they run into problems. Each case is different and must be handled on an ad hoc basis. No banker and certainly no shareholder in a local bank should be lulled into an imprudent belief that if he gets into trouble Exchange Fund support is inevitable. A judgment must be made in each case, and it is the interests of depositors, not those of shareholders, directors or managers of banks which must take priority. This judgment also has to take into account possible ripple effects. One day - and the
there will not be support for a small bank in trouble. We will be ruthless in this regard provided that it does not result in serious damage to the prosperity and stability of Hong Kong. We have all along taken this approach to the problems of DTC's.
sooner the better
16.
—
There is no precedent. Each case stands on its own. My message is clear and will I hope be
understood.
17.
There really is very little similarity between the problems of Hang Lung, OTB, HICB, Wing On, Ka Wah and Union Banks.. All have required widely different
approaches. Some may prove expensive to the Exchange Fund: others like the Union Bank will probably cost nothing. In some cases improper practice has been widespread. The Commissioner of Banking, unknown to the public because of the clear need for secrecy, has also been involved in seeking to give good counsel to several other small banks. He has patently been successful. news is good news. We do not seek headlines.
No
1.8.
Members may ask why these responsibilities should be placed by law, as they are, on the Financial Secretary and Banking Commissioner and not shared more widely. The answer lies in part in the need for banking secrecy. But in part too in the need for them to be able
7.
-7-
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