WEDNESDAY, MAY 28, 1986
HOWEVER, HE POINTED OUT THAT THE WHOLE TENOR OF THE PRESENT BILL WAS TOWARDS UNIFICATION AND NOT DIVERSITY AND HE CONSIDERED THE REASONS ADVANCED FOR SEPARATE TREATMENT NOT FULLY CONVINCING.
HE APPRECIATED THAT THE SMALLER BANKS, TRADITIONALLY CLOSELY-OWNED BY FAMILY INTERESTS AND DOING BUSINESS TO A LARGE EXTENT WITH RELATED SHAREHOLDERS, WOULD BE AFFECTED BY THE BILL'S LIMITATION ON LOANS PROVISIONS AND NOT ONLY BY CAPITAL ADEQUACY RATIOS.
+ WHETHER THE LIKELY DISAPPEARANCE OF THE LIMITED NUMBER OF REMAINING SMALLER BANKS AND THEIR SERVICE CAPABILITY FOR THE PROVERBIAL 'MAN IN THE STREET' IS A PROPER PRICE TO PAY FOR THE INCREASING SOPHISTICATION AND SIZE OF HONG KONG AS A FINANCIAL MARKET PLACE OF INTERNATIONAL STANDING, OR IS IN ANY EVENT INEVITABLE OR ACTUALLY PREFERRED, IS PERHAPS AND ACADEMIC QUESTION,+ HE SAID.
+HISTORICAL EXAMPLES CAN LIKELY BE FOUND OF BANKS WHICH SURVIVED BECAUSE OF THE CONCENTRATION OF RISK TO A SINGLE NAME OR SECTOR AFFILIATED WITH IT. WHILE OTHER BANKS WITH AN ACCEPTABLE DIVERSIFIED EXPOSURE AND FULLY SUPERVISED GOT CONCURRENTLY INTO DIFFICULTIES,+ HE ADDED.
F
DR SOHMEN WELCOMED THE INCLUSION IN THE THIRD SCHEDULE OF SOME OFF-BALANCE SHEET RISKS, GIVEN THE CONCERN OF BANK SUPERVISORY AUTHORITIES IN MANY COUNTRIES WITH THE GROWING PRACTICE OF SECURISATION OF DEBT, ADDING THAT ONLY TIME AND EXPERIENCE WOULD TELL WHETHER THE RISK CLASSIFICATIONS WERE REALISTIC.
LASTLY, ON THE CLASSIFICATION OF PERPETUAL FLOATING RATE NOTES AS CAPITAL, HE OBSERVED THAT INSTITUTIONS GOVERNED BY THE BILL HOLDING SUCH NOTES WOULD FACE RESTRICTIONS.
+CLAIMS THAT THIS WILL AFFECT THE ISSUE, THE TRADING, AND CONSEQUENTLY THE PRICE OF THESE NOTES ARE PROBABLY WELL-FOUNDED- ON THE OTHER HAND, IT SEEMS DIFFICULT TO MAKE A DISTINCTION IN THE CHARACTER OF THIS FORM OF DEBT FOR SEPARATE PARTS OF THE BILL, AND THE ADOPTED TREATMENT HAS THE BENEFIT OF LOGICAL CONSISTENCY, HE SAID.
IN CONCLUSION, DR SOHMEN SAID THE BILL CONTAINED COMPROMISES WHICH WERE ACCEPTABLE ONES REACHED AFTER A GREAT DEAL OF INFORMED DEBATE.
+ THE BILL DOES OF COURSE ATTEMPT TO LOCK THE STABLE DOOR AFTER THE HORSE HAS BOLTED - SEVERAL HORSES IN FACT - BUT IT IS A NECESSARY AND STILL A VERY TIMELY BILL, HE ADDED.
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