TUESDAY, SEPTEMBER 27, 1983
GOVERNMENT TAKES OVER HANG LUNG BANK
IN INTEREST OF DEPOSITORS
*****
A BILL GIVING OWNERSHIP OF THE HANG LUNG BANK TO THE HONG KONG GOVERNMENT, IN THE INTEREST OF DEPOSITORS, WAS PASSED AT A SPECIA
EETING OF THE LEGISLATIVE COUNCIL THIS (TUESDAY) EVENING.
MOVING THE SECOND READING OF THE HANG LUNG BANK (ACQUISITION) BILL 1983 AT THE COUNCIL, THE FINANCIAL SECRETARY, THE HON SIR JOHN BREMRIDGE EXPLAINED THAT IF APPROVED THE BILL WOULD MEAN THAT THE BANK WOULD BE OWNED FROM TOMORROW (WEDNESDAY) BY THE GOVERNMENT WHO WOULD STAND BEHIND DEPOSITORS.
THE FINANCIAL SECRETARY STRESSED THAT THIS UNHAPPY SITUATION, THE POSSIBILITY OF WHICH THE GOVERNMENT HAD LONG BEEN AWARE, OWED NOTHING TO PRESENT POLITICAL ISSUES.
+THE GOVERNMENT, TOGETHER WITH THE TWO NOTE-ISSUING BANKS, HAVE BEEN KEEPING A CLOSE AND CONTINUOUS WATCH ON DEVELOPMENTS AT THE HANG LUNG BANK FOR THE WHOLE OF THE LAST 12 MONTHS, HE SAID.
+ IT IS OUR INTENTION THAT THE HANG LUNG BANK UNDER SOUND MANAGEMENT WILL IN DUE COURSE REVERT TO PRIVATE OWNERSHIP ON A BASIS YET TO BE DETERMINED.+
SIR JOHN SAID THAT EVENTS IN THE PAST DAYS, COUPLED WITH REPAYMENT OF BORROWINGS FROM ITS CLEARING BANK, HAD AGAIN LED TO SEVERE SHORTAGE OF LIQUIDITY BY THE BANK. THE BANK THEN REPORTED THIS MORNING TO THE COMMISSIONER OF BANKING THAT IT WAS UNABLE TO MEET IN FULL ITS LIABILITIES TO THE CLEARING HOUSE IN RESPECT OF CHEQUES DRAWN BY CUSTOMERS. IT ALSO MADE VARIOUS UNACCEPTABLE SUGGESTIONS, SIR JOHN ADDED.
THE CHARTERED BANK, AS THE HANG LUNG BANK'S CLEARING BANK, INFORMED THE SECRETARY FOR MONETARY AFFAIRS THAT IT WAS NOT PREPARED TO COVER ABOUT HK$50 MILLION OVERDRAWN ON HANG LUNG BANK'S CLEARING ACCOUNT WITH IT AND THAT CONSEQUENTLY IT INTENDED TO INFORM THE CLEARING HOUSE IN THE MORNING THAT THE HANG LUNG BANK WAS UNABLE TO MEET ITS CLEARING.
+THIS WOULD HAVE MEANT THAT HK$148 MILLION WORTH OF CHEQUES WOULD HAVE BEEN RETURNED TO THE BANKS SUBMITTING THEM FOR CLEARING. A DANGEROUS SITUATION WOULD HAVE RESULTED, THE FINANCIAL SECRETARY SAID.
SIR JOHN EXPLAINED THAT AS AN EMERGENCY MEASURE THE GOVERNMENT HAD UNDERTAKEN TO COVER THE POSITION FOR ONE DAY TO AVOID CHEQUES BEING DISHONOURED.
+THE GOVERNMENT NOW INTENDS TO TAKE LONGER TERM MEASURES WHICH WILL PROTECT THE BANK'S DEPOSITORS. THEY WILL APPRECIATE THAT THE CONSEQUENCES OF THIS LEGISLATION IF PASSED INTO LAK TONIGHT WILL BE THAT THE BANK WILL BE OWNED FROM TOMORROW BY THE GOVERNMENT WHO WILL STAND BEHIND DEPOSITORS,+ HE SAID.
+