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KN
MONDAY, OCTOBER 20, 1986
ON THE QUESTION OF CONTINUAL RESTRICTIONS IN THE TYPES OF DEPOSITS THAT COULD BE TAKEN BY DEPOSIT-TAKING COMPANIES, GIVEN THAT THEY WERE SUBJECT TO THE SAME SUPERVISION AS BANKS, MR JACOBS SAID THE ANSWER BEING THAT THE CAPITAL AND ASSETS REQUIREMENTS THAT EXISTED BETWEEN BANKS AND DTC'S WERE DIFFERENT THE PRESENT MARKET POSITIONS HAD BEEN ESTABLISHED OVER A NUMBER OF YEARS ACCORDING TO THE PREVAILING RULES OF THE GAMES AND NOT ALL CHANGES COULD BE INTRODUCED AT ONCE, AND IT SEEMED SENSIBLE TO HAVE THE NEW ORDINANCE FIRMLY IN PLACE SO THAT THE INDUSTRY MIGHT HAVE TIME TO ADJUST BEFORE THE GOVERNMENT EVEN ATTEMPTED TO ALTER THE RULES ONCE MORE.
MR JACOBS THEN MENTIONED AN IMPORTANT ADDITION TO THE LEGISLATIVE FRAMEWORK.
+UNDER THE ORDINANCE, THE COMMISSIONER WILL PREPARE A REPORT TO THE GOVERNOR-IN-COUNCIL EVERY YEAR ON THE WORKING OF THE ORDINANCE AND THE ACTIVITIES OF HIS OFFICE, AND MAKE RECOMMENDATIONS FOR IMPROVEMENTS,+ HE SAID.
+ THE FIRST OF THESE REPORTS COVERING THE YEAR 1986 SHOULD BE AVAILABLE NEXT SPRING,+ HE ADDED.
REGARDING CRITICISM OF THE GOVERNMENT FOR USING THE EXCHANGE FUND TO ASSIST BANKS WHICH HAD GOT THEMSELVES INTO DIFFICULTIES, MR JACOBS SAID THE PLAIN FACT OF THE MATTER WAS THAT NO RESPONSIBLE GOVERNMENT COULD TURN ITS BACK ENTIRELY ON PROBLEMS IN THE BANKING SECTOR.
+WHAT WE MUST DO IS TO ENSURE THAT WHATEVER STEPS ARE TAKEN THERE IS ORDERLINESS AND STABILITY IN THE MARKETPLACE.
MR JACOBS SAID HE BELIEVED THAT THE GOVERNMENT HAD ACHIEVED THAT AND THE NEW FRAMEWORK OF THE BANKING LEGISLATION WOULD FURTHER ASSIST IT IN THIS REGARD.
+I BELIEVE WE HAVE EMERGED FROM OUR TEMPORARY DIFFICULTIES WITH THE CONFIDENCE IN OUR BANKING SYSTEM INTACT, HE SAID.
+NO BANK DEPOSITORS HAVE LOST THEIR MONEY. GOVERNMENT'S INTERVENTION WITH MEASURES RANGING FROM DIRECT ACQUISITION TO BEING MERELY A CATALYST HAS BEEN EFFECTIVE. THERE HAVE BEEN WELCOMED INJECTIONS OF CAPITAL AND MANAGEMENT EXPERTISE IN SOME OF THE SMALLER BANKS.+
MR JACOBS SAID THAT THE TWO GOVERNMENT-OWNED BANKS, HANG LUNG AND OVERSEAS TRUST BANK, AND HONG KONG INDUSTRIAL AND COMMERCIAL BANK IN WHICH GOVERNMENT HAD A MAJORITY INTEREST, WERE RECOVERING STEADILY: TWO OUT OF THE THREE HAD RETURNED TO PROFITABILITY AND THEY WOULD ALL BE SOLD BACK TO THE PRIVATE SECTOR AT THE RIGHT TIME.
HE ADDED