WEDNESDAY, DECEBER 7. 1983
7,
4
+THESE AMENDMENTS, THEREFORE, TOGETHER WITH THE OTHER TO BE PROPOSED BY THE ADMINISTRATION ARE CONSIDERED SENSIBLE MEASURES AND THEY HAVE OUR SUPPORT, HE ADDED.
THE FINANCIAL SECRETARY, THE HON SIR JOHN BREMRIDGE, WELCOMED THE AMENDMENTS PROPOSED BY MR BROWN, THANKING HIM AND OTHER UNOFFICIALS FOR THE IR CONSIDERATION TO THE BILLS AND TO THE MANY REPRESENTATIONS MADE.
SIR JOHN ALSO CONFIRMED THAT EXCEPT IN EXCEPTIONAL CIRCUMSTANCES, THE COMMISSIONER WOULD NOT EXERCISE HIS NEWLY CONFERRED AUTHORITY TO LIMIT PLACEMENTS BY BANKS OR DTC'S WITH FOREIGN BANKS, IN RESPECT OF ANY FOREIGN BANK WHICH HE CONSIDERED TO BE ADEQUATELY SUPERVISED BY THE RELEVANT AUTHORITY IN ITS PLACE OF INCORPORATION.
HE ADDED THAT SHOULD THE ADMINISTRATION IN THE FUTURE PROPOSE ANY CHANGES TO THE DEFINITION OF A COMPANY IN THE TWO PRINCIPAL ORDINANCES, IT WOULD CAREFULLY EXAMINE THE NEED FOR CONSEQUENTIAL AMENDMENTS ELSEWHERE IN THE ORDINANCES, NOT LEAST IN RESPECT OF NON-LISTED COMPANIES.
SIR JOHN ALSO SPOKE ON VARIOUS AMENDMENTS TO THE TWO BILLS WHICH HE MOVED TODAY.
UNDER PRESENT ADMINISTRATIVE ARRANGEMENTS SOME DTC'S AND BANKS HAVE IN EFFECT BEEN ALLOWED TO LEND WITHOUT LIMIT TO A SINGLE CUSTOMER OR SINGLE CUSTOMER GROUP.
THIS HAS BEEN BASED ON THE STRENGTH OF A LETTER OF COMFORT FROM ITS PARENT. BY VIRTUE OF THE COMMISSIONER FOR HISTORICAL REASONS REGARDING THE LETTER OF COMFORT AS AN ACCEPTABLE FORM OF GUARANTEE.
SIR JOHN POINTED OUT THAT THE AMENDMENTS MOVED BY HIM WOULD, HOWEVER, ENABLE THE COMMISSIONER TO RAISE THE LIMIT ON LENDING TO SINGLE CUSTOMERS OR GROUPS BEYOND 25 PER CENT OF CAPITAL AND RESERVES, IF THE COMMISSIONER IS IN POSSESSION OF A LETTER OF COMFORT WHICH CONFORMS TO CERTAIN CRITERIA,
ONE OF THESE CRITERIA WOULD BE THAT THE LETTER MUST BE
ISSUED BY A BANK.
IN ADDITION, THE FINANCIAL SECRETARY AS A MATTER OF ADMINISTRATIVE PRACTICE WOULD REQUIRE THE COMMISSIONER TO DISCUSS WITH THE SECRETARY FOR MONETARY AFFAIRS ALL PROPOSALS TO SET A LIMIT HIGHER THAN 25 PER CENT.
+CONSEQUENTLY THERE WILL BE AN END TO THE PRESENT SITUATION WHEREBY A BANK OR DTC CAN, UNDER THE UMBRELLA OF A LETTER OF COMFORT, LEND AS MUCH AS IT LIKES TO SINGLE CUSTOMERS.
THIS IS AN OPEN-ENDED CAPABILITY WHICH HAS LED TO A NUMBER OF SERIOUS PROBLEMS, EVEN THOUGH DEPOSITORS' INTERESTS MAY HAVE BEEN SAFEGUARDED, SIR JOHN EXPLAINED.
J
/SIR JOHN