WEDNESDAY, MAY 28, 1986
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SPEEDIER PINPOINTING OF POTENTIAL PROBLEMS
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THE BANKING BILL 1986 SHOULD ENHANCE THE REGULATION OF THE BANKING BUSINESS AND ALSO ASSIST THE COMMISSIONER OF BANKING TO IDENTIFY POTENTIAL PROBLEMS EARLIER THAN HITHERTO, THE HON THOMAS CLYDESDALE SAID IN THE LEGISLATIVE COUNCIL TODAY WEDNESDAY).
HE SAID IN PARTICULAR THE PROVISION FORMALISING THE RELATIONSHIP BETWEEN AUTHORISED INSTITUTIONS, SUPERVISORS AND AUDITORS AND ENABLING MEETINGS BETWEEN THESE THREE PARTIES TO TAKE PLACE WITHOUT ETHICAL CONSTRAINTS WAS MOST HELPFUL.
+ SUCH MEETINGS SHOULD ENABLE THE THREE PARTIES TO JOINTLY WORK OUT, ON A TIMELY BASIS, SOLUTIONS TO PROBLEM MATTERS REVEALED BY AUDIT OR EXAMINATION THUS HELPING TO SAFEGUARD THE INTERESTS OF DEPOSITORS AND SHAREHOLDERS, HE SAID.
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HOWEVER, HE POINTED OUT THAT THE BILL DID NOT ADDRESS THE PARTICULAR PROBLEM OF THE USE OF NOMINEE COMPANIES TO CONCEAL THE CONCENTRATION OF LOANS TO ONE PERSON OR COMPANY.
HE SAID SINCE AUTHORISED INSTITUTIONS SHOULD BE AWARE OF THE IDENTITY OF THE ULTIMATE BENEFICIAL BORROWER OF FUNDS AND THE USES TO WHICH THE FUNDS WERE TO BE PUT, THE COMMISSIONER SHOULD GIVE CONSIDERATION TO INTRODUCING A REQUIREMENT FOR THIS INFORMATION TO BE RECORDED BY THE AUTHORISED INSTITUTION IN A REGISTER TO BE AVAILABLE FOR INSPECTION BY BOTH THE AUDITORS OF THE INSTITUTION AND THE COMMISSIONER.
ON THE CAPITAL ADEQUACY TEST INTRODUCED BY THE BILL,
MR CLYDESDALE SAID ALTHOUGH IT WOULD NOT BE BROUGHT INTO OPERATION UNTIL APPROXIMATELY TWO YEARS AFTER THE OTHER PROVISIONS OF THE BILL, IT WAS TO BE HOPED THAT THE COMMISSIONER WOULD CONSIDER ANY NECESSARY ADJUSTMENTS TO THE PERCENTAGES AND CLASSIFICATIONS OF ASSETS IN THE LIGHT OF OPERATIONAL EXPERIENCE.
ON THE SUBJECT OF APPEAL PROCEDURES, HE SUGGESTED THAT CONSIDERATION MIGHT BE GIVEN TO THE ESTABLISHMENT OF A BANKING COMMISSION SIMILAR TO THE EXISTING SECURITIES COMMISSION.
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