FRIDA JUNE 7, 1985
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TAKEOVER OF OTB IS SAFEST COURSE OF ACTION, FS SAYS
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THE SAFEST COURSE OF ACTION WHICH COULD BE TAKEN BY THE GOVERNMENT WAS TO TAKE OVER THE OVERSEAS TRUST BANK LIMITED, GIVING COMPLETE PROTECTION FOR ALL DEPOSITORS AND CREDITORS, THE FINANCIAL SECRETARY, THE HON SIR JOHN BREMRIDGE, TOLD THE LEGISLATIVE COUNCIL THIS (FRIDAY) EVENING.
MOVING THE SECOND READING OF THE OVERSEAS TRUST BANK (ACQUISITION) BILL 1985, AT A SPECIAL SITTING OF THE COUNCIL, SIR JOHN SAID:
+WHAT THIS MEANS TO THE PUBLIC AND TO FINANCIAL INSTITUTIONS WHO HAVE DEPOSITS WITH THE OVERSEAS TRUST BANK LIMITED IS IN EFFECT THAT THEIR MONEY IS NOW HELD BY A BANK WHOLLY OWNED BY THE HONG KONG GOVERNMENT, SIMILAR TO THE HANG LUNG BANK,
STATING THAT THERE WAS NO CAUSE FOR FURTHER ANXIETY, SIR JOHN ADDED: + IF THIS COUNCIL ACCEPT THIS BILL, THE OVERSEAS TRUST BANK WILL RE-OPEN FOR BUSINESS ON MONDAY UNDER NEW OWNERSHIP,+
SIR JOHN SAID THAT IT WAS GOVERNMENT'S FIRM VIEW THAT THE INTERESTS OF DEPOSITORS WITH BANKS LICENSED IN HONG KONG, THE INTEGRITY OF HONG KONG'S FINANCIAL SYSTEM AND ITS INTERNATIONAL REPUTATION HAD TO BE SAFEGUARDED.
IT WAS NOT POSSIBLE YET TO QUANTIFY WHAT THE COSTS WOULD BE TO THE EXCHANGE FUND, FROM WHICH EXPENSES WOULD BE MET. THE OVERSEAS TRUST BANK WAS SOMEWHAT LARGER THAN THE HANG LUNG BANK BUT BY TAKING EARLY DECISIVE ACTION THE EVENTUAL COSTS TO PUBLIC MONEY WOULD BE MINIMISED, SIR JOHN SAID.
THE HONG KONG AND SHANGHAI BANK, HE SAID, HAD AGREED TO PROVIDE SENIOR FULL TIME MANAGEMENT AND AN EXÉCUTIVE DIRECTOR. THE CHAIRMAN WOULD BE THE SECRETARY FOR MONETARY AFFAIRS AND ADDITIONAL DIRECTORS WOULD BE APPOINTED. BUT THE GOVERNMENT WOULD, IN THE FIRST INSTANCE, CALL UPON THE SERVICES OF THOSE WHO WERE CURRENTLY DIRECTORS OF THE HANG LUNG BANK BECAUSE THERE WERE USEFUL EXPERIENCES TO BE DRAWN UPON. THE FUTURE STRUCTURE OF THE BANK WOULD REQUIRE A FULL STUDY.
IN HIS SPEECH, HE SAID THAT THE OVERSEAS TRUST BANK HAD NOTIFIED THE COMMISSIONER OF BANKING AT 4.30 PM ON THURSDAY, JUNE 6, THAT IT WAS INSOLVENT.
+AFTER CONSULTATION WITH ME, THE COMMISSIONER EXERCISED HIS POWERS OF CONTROL UNDER SECTION 13 (1) OF THE BANKING ORDINANCE AND HAS DIRECTED THE BANK AND ITS BOARD OF DIRECTORS TO DESIST FROM UNDERTAKING ANY BUSINESS WHATSOEVER IN ITS BRANCH OFFICES IN HONG KONG OR ELSEWHERE OVERSEAS UNTIL FURTHER NOTICE.
+ IN EFFECT THE BANK'S OPERATIONS WERE FROZEN. IN THE BANK'S SHARES ON VARIOUS STOCK EXCHANGES.
SO WAS TRADING
/THIS DEVELOPMENT