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THURSDAY, DECEMBER 9, 1982
+STATUTORY LIQUIDITY IS MEASURED OVER THE COURSE OF A CALENDER MONTH BY TAKING THE AVERAGE LIQUID ASSETS AND DEPOSITS ON THE SPECIFIED WEEKDAYS (WEDNESDAYS) DURING THE MONTH. FAILURE TO MEET THE MINIMUM STATUTORY LIQUIDITY IS A GROUND FOR SUSPENSION OR REVOCATION OF REGISTRATION OF A COMPANY AS A DEPOSIT-TAKING COMPNAY. I WILL CERTAINLY ALLOW DEPOSIT-TAKING COMPANIES A REASONABLE PERIOD OF TIME TO DETERMINE WHETHER THEY ARE ABLE TO SOLVE THEIR LIQUIDITY PROBLEMS. I DO NOT INTEND TO ACT HASTILY, BUT THE TIME MAY COME WHEN I WILL NEED TO ACT.
COMMENTING ON THE FOUNDATION OF THE BANKING AND DEPOSIT-TAKING COMPANY SECTOR, MR MARTIN SAID ITS STRENGTH LAY ESSENTIALLY IN THE NETWORK OF RELATIONSHIPS BETWEEN INDIVIDUAL INSTITUTIONS WITHIN THAT SECTOR AND WITH FOREIGN BANKS NOT LICENSED IN HONG KONG.
+1 APPRECIATE THAT DECISIONS ON WHETHER OR NOT TO RENEW, ON MATURITY, CREDIT LINES EXTENDED BY FOREIGN BANKS TO DEPOSIT-TAKING COMPANIES ARE NOT ALWAYS MADE BY THE MAN-ON-THE-SPOT IN HONG KONG, BUT RATHER BY HIS SENIOR OFFICER SITTING POSSIBLY THOUSANDS OF MILES AWAY. NEVERTHELESS, WITHIN REASON, FINANCIAL INSTITUTIONS NEED ONE ANOTHER'S CONFIDENCE AND SUPPORT IN TIMES OF STRESS AND STRAIN AND IT IS TO THE MUTUAL BENEFIT OF THE FINANCIAL COMMUNITY AS A WHOLE THAT INDIVIDUAL MEMBERS OF IT DO NOT BATTEN DOWN THE IR OWN HATCHES IN ISOLATION.
+THE RECENT ANNOUNCEMENT OF THE HONG KONG AND SHANGHAI BANKING CORPORATION INDICATING ITS WILLINGNESS TO SUPPORT SOUNDLY BASED AND WELL-MANAGED DEPOSIT-TAKING COMPANIES WAS NATURALLY WELCOMED BY ALL OF US IN HONG KONG, ALTHOUGH THE TERMS 'SOUNDLY BASED AND WELL- MANAGED WERE QUESTIONED BY SOME. NEVERTHELESS, LET ME SAY THAT I SINCERELY HOPE THAT ANY DEPOSIT-TAKING COMPANY WHICH IS EXPERIENCING LIQUIDITY PROBLEMS, WHICH IT CANNOT SOLVE IN CONSULTATION WITH ITS ESTABLISHED BANKERS, WILL NOT HESITATE TO APPROACH OUR LARGEST BANK FOR ASSISTANCE. I AM OBVIOUSLY NOT ABLE TO SAY WHAT THE OUTCOME OF SUCH AN APPROACH WOULD BE, BUT I CAN SAY THAT I AM CONFIDENT THE DEPOSIT-TAKING COMPANY WOULD GET A FAIR HEARING.+
MR MARTIN DEFENDED THE ROLE OF HIS OFFICE IN SUPERVISING THE OPERATIONS OF BANKS AND DEPOSIT-TAKING COMPANIES, WHICH HE SAID DEFINITELY DID NOT INCLUDE INTERVENING IN THE CONTRACTUAL RELATIONSHIPS BETWEEN FINANCIAL INSTITUTIONS,
+I HAVE IN MY OFFICE A STAFF OF 160 WHO EXERCISE, UNDER MY DIRECTION, A SYSTEM OF PRUDENTIAL SUPERVISION OF BANKS AND DEPOSIT- TAKING COMPANIES. THE SYSTEM IS BASED UPON A COMPREHENSIVE MONTHLY RETURN AND IS SUPPORTED BY TEAMS OF EXPERIENCED EXAMINERS FROM MY OFFICE WHO REGULARLY VISIT ALL LICENSED BANKS AND LICENSED AND REGISTERED DEPOSIT-TAKING COMPANIES TO CARRY OUT MANAGEMENT EXAMINATIONS. THIS INVOLVES US, FOR EXAMPLE, IN SATISFYING OURSELVES THAT THE MANAGEMENT IS ADEQUATELY REVIEWING THE QUALITY OF THE INSTITUTION'S ASSETS ON A REGULAR BASIS RATHER THAN OUR DOING THE JOB OURSELVES.+
/HE SAID