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PRIY, JUNE 7, 1985
THIS DEVELOPMENT FOLLOWED AN INTENSIVE EXAMINATION OF THE BANK'S BOOKS BY FOUR TEAMS OF EXAMINERS FROM THE COMMISSIONER'S OFFICE DURING THE PAST TWO MONTHS AND AN URGENT STUDY BY A MERCHANT BANKER. THERE HAD ALSO BEEN PROLONGED CONSULTATIONS WITH EXECUTIVES AND DIRECTORS OF THE BANK.
+THE RESULTS OF THE EXAMINATIONS INDICATED THAT THE BANK'S PROBLEM WENT BEYOND IMPRUDENT MANAGEMENT OR MISFORTUNE AND THAT THE EXTENT OF PROVISIONS WHICH OUGHT PRUDENTLY TO BE MADE IN RESPECT OF EXISTING BAD AND DOUBTFUL LOANS WAS SUCH THAT THE CAPITAL OF THE BANK WAS MORE THAN WHOLLY LOST, + SIR JOHN SAID.
+ALTHOUGH BANKING SUPERVISION CAN ALWAYS BE IMPROVED UPON, THE PROBLEMS OF OVERSEAS TRUST BANK APPEAR TO HAVE ARISEN FROM CRIMINAL ACTIONS AND NOT FROM LACK OF PRUDENTIAL SUPERVISION BY THE BANKING COMMISSION.+
SIR JOHN SAID THAT THE BILL IS MODELLED ON THE HANG LUNG BANK ACQUISITION ORDINANCE. IT PROVIDES FOR THE ACQUISITION OF THE OVERSEAS TRUST BANK LIMITED BY THE GOVERNMENT AND THE SUBSEQUENT CARRYING ON OF ITS BUSINESS.
HE SPECIFICALLY DREW COUNCIL MEMBERS' ATTENTION TO CLAUSE 8 OF THE BILL WHICH ENABLES THE FINANCIAL SECRETARY, ON BEHALF OF THE GOVERNMENT, TO GUARANTEE THE DEBTS OF THE BANK.
+OBLIGATIONS UNDER THE GUARANTEE ARE CHARGED ON THE EXCHANGE FUND. IN THE ABSENCE OF SUCH A GUARANTEE THE NEWLY APPOINTED DIRECTORS COULD NOT CONTINUE TO OPERATE THE BANK, AS TO DO SO WOULD RESULT IN CONTRAVENTION OF THE BANKRUPTCY LAWS BECAUSE THE BANK IS INSOLVENT.
+PROVISION IS PROPERLY MADE IN THE BILL FOR POSSIBLE COMPENSATION. I SHALL BE VERY SURPRISED IF ANY IS DUE,+ SIR JOHN
SAID.
SIR JOHN SAID THAT HE KNEW THAT THE STAFF OF THE BANK WOULD RESPOND ACCORDINGLY AND GIVE THEIR FULL SUPPORT TO THE NEW MANAGEMENT.
HE PAID TRIBUTE TO MANY OF HIS COLLEAGUES WHO HAD WORKED THROUGHOUT THE NIGHT SO THAT THIS MATTER COULD BE HANDLED EXPEDITIOUSLY.
HE THEN MOVED THAT THE DEBATE ON THE MOTION BE TAKEN.
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