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II. The Review
III.
3.
criteria, should
In considering the 1989 review of bank licensing the Governor in Council decided that an assessment be made of the operations of the new category of rlb a decision was made on the recommended changes to the licensing criteria for local applicants.
before
4.
The
current review was conducted for this purpose. It assesses in particular
A
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(a) the extent to which the new category has achieved
the objectives set out in paragraph 1; and
(b) how far it has eased the problems identified in
paragraph 2.
questionnaire survey was conducted in February 1992 to collect feedback from the rlbs on their experience in operating in this category.
All (55) rlbs have been surveyed. 21 of these institutions were licensed after the introduction of the new category, and 34 were formerly licensed dtcs and have been grandfathered. In terms of corporate form, 22 are foreign bank branches and 33 are locally incorporated subsidiaries.
5.
Survey results
(a)
(b)
Major survey results are provided below
the majority of the ribs are content with the new rlb category which has appeared to suit their needs well and brought about certain improvements to their status;
the new category has been successful in attracting foreign banks which cannot meet the size criterion for a full banking licence to branch into Hong Kong.
of the 21 new entrants, 17 have chosen to operate in branch form. This reflects that these institutions
are mainly interested in wholesale banking and that they see the one-branch licence sufficient for the scale and nature of their business;
(c) most foreign banks prefer setting up branches because of the ability to trade under their parents' own names and trade on the parents' capital. These advantages will not be available if they set up rlbs in subsidiary form. Foreign banks which set up subsidiaries do so mainly for taxation or other regulatory reasons;