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Financial and Monetary Affairs
Banking
Main Features
Hong Kong maintains three tiers of deposit-taking institutions: licensed banks (LBs), restricted licence banks (RLBS) and deposit-taking companies (DTCs)8. They are known collectively as Als under the Banking Ordinance and are licensed by the HKMA.
The city has one of the highest concentrations of banking institutions in the world. At the end of 2015, there were 157 LBS, 24 RLBS and 18 DTCs. These 199 Als maintained a network of more than 1,310 local branches. There were also 63 representative offices of banks incorporated outside Hong Kong.
Hong Kong Monetary Authority
The HKMA's main functions are to maintain currency stability within the framework of the Linked Exchange Rate System through sound management of the Exchange Fund, monetary policy operations and other means deemed necessary; to promote stability and integrity of the financial system, including the banking system; to help maintain Hong Kong's status as an international financial centre, including the maintenance and development of the city's financial infrastructure, and to manage the Exchange Fund.
The HKMA is an integral part of the government, but operates with a high degree of autonomy, complemented by a high degree of accountability and transparency, and can employ people on terms that differ from those of the civil service to attract personnel of suitable experience and expertise. It is accountable to the Financial Secretary, who is advised by the Exchange Fund Advisory Committee in control of the Exchange Fund.
The Banking Advisory Committee and the Deposit-taking Companies Advisory Committee are established under the Banking Ordinance to give advice on relevant policy matters. They are chaired by the Financial Secretary and comprise members from banking and other professions.
The HKMA seeks to maintain a regulatory framework that is fully in line with international standards. The aim is to devise a prudential supervisory system to preserve the stability and effective working of the banking system, while at the same time providing sufficient flexibility for Als to make commercial decisions.
Recent Developments
The Hong Kong banking sector remained sound in 2015 despite monetary policy divergence in advanced economies and the build-up of vulnerabilities in emerging market economies. The quality of retail banks' assets remained healthy by historical standards. Liquidity ratios remained well above the regulatory minimum. Locally incorporated Als continued to be well capitalised.
At the end of 2015, total deposits and loans and advances at Als increased to $10,749.8 billion and $7,534.5 billion respectively, up 6.7 per cent and 3.5 per cent from a year earlier. Total assets also rose 4 per cent to $19,180.4 billion.
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Only LBS may conduct full banking services, including the provision of current and savings accounts and acceptance of deposits of any size and maturity. RLBS may take deposits of any maturity of $500,000 or above. DTCs may take deposits of $100,000 or above with an original maturity of at least three months.
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