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FINANCIAL AND MONETARY AFFAIRS
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HONG KONG'S financial sector comprises an integrated network of institutions and markets which, under various forms of regulation, provide a wide range of products and services to local and international customers and investors.
Financial Institutions
Hong Kong maintains a three-tier system of deposit-taking institutions: licensed banks, restricted licence banks and deposit-taking companies.
Banking licences are granted at the discretion of the Governor in Council, in accordance with the provisions of the Banking Ordinance. In September 1992, the Governor in Council made a number of changes to the criteria for bank licence applications as part of the regular review of such criteria. In the case of a local applicant incorporated in Hong Kong, the criterion that it should be predominantly beneficially owned by Hong Kong interests has been broadened to enable close association and identification with the territory to be taken into consideration. Apart from the requirements of a paid-up capital of at least $150 million and a minimum of 10 years in the business of taking deposits from and granting credit to the public, which have remained unchanged, an applicant has also to satisfy minimum requirements on assets (net of contra items) and public deposits. The latter two requirements were increased to $4,000 million and $3,000 million respectively. In the case of a bank incorporated outside Hong Kong applying to establish a branch in the territory, the asset size requirement (net of contra items) was increased to US$16,000 million. A licence may still be granted in exceptional circumstances, however, if the bank is of exceptionally high standing or if banks from its country of incorporation are under-represented in Hong Kong. The criterion dealing with home country supervision has also been changed to the effect that the home supervisor must demonstrate the necessary capabilities. for meeting the minimum standards for supervision of international banks published by the Basle Committee of Supervisors in June. In general, there should be some acceptable form of reciprocity in an overseas applicant's home country to banks from Hong Kong.
At the end of 1992, there were 164 licensed banks in Hong Kong, 30 of which were locally incorporated. They maintained a total of 1 409 offices in Hong Kong. In addition, there were 148 representative offices of foreign banks. The total deposit liabilities of all the licensed banks to customers at the end of the year was $1,449 billion.