TUESDAY, NOVEMBER 18, 1986
GOVT AIMS AT MAINTAINING BANKING STABILITY
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GOVERNMENT INTERVENTION IN THE BANKING SECTOR DOES NOT ALWAYS INVOLVE A LIABILITY ON PUBLIC FUNDS, NOR DOES IT REPRESENT A SAFETY NET FOR SHAREHOLDERS AND MANAGERS.
WHAT THE GOVERNMENT SEEKS TO ACHIEVE IS THE STABILITY OF THE SYSTEM COUPLED WITH THE PROTECTION OF DEPOSITORS.
THIS WAS STATED BY THE FINANCIAL SECRETARY, MR PIERS JACOBS, IN AN ADDRESS TO THE HONG KONG ASSOCIATION OF BANKS THIS (TUESDAY) EVENING.
MR JACOBS SAID THE GOVERNMENT HAD HAD TO INTERVENE IN THE AFFAIRS OF TWO SMALL BANKS IN RECENT MONTHS.
+WE WERE QUITE PREPARED TO SEE THEM GO INTO ORDERLY LIQUIDATION, AND I STRESS THE WORD ORDERLY'. BUT IN THE EVENT VIABLE COMMERCIAL SOLUTIONS WERE FOUND WITHOUT ANY LONG-TERM COMMITMENT ON THE EXCHANGE FUND, HE SAID.
MR JACOBS SAID THAT TWO OF THE THREE GOVERNMENT-OWNED BANKS HAD RETURNED TO PROFITABILITY AND THEY WOULD BE RETURNED TO THE PRIVATE SECTOR AT THE RIGHT TIME.
+I HAVE NO DOUBT THAT AS A RESULT OF OUR ACTIONS AND THE POLICIES WE HAVE FOLLOWED THE FINANCIAL SECTOR HAS BEEN MADE MORE SECURE, AND AT A MODEST COST TO THE PUBLIC PURSE IF ONE CONSIDERS WHAT WAS AT RISK.+
TURNING TO THE DEVELOPING NEXUS BETWEEN FINANCIAL SERVICES AND INDUSTRY, MR JACOBS SAID MANUFACTURING REMAINED AN IMPORTANT PILLAR OF THE ECONOMY, WHICH ACCOUNTED FOR SOME 25 PER CENT OF GROSS DOMESTIC PRODUCT AND 36 PER CENT OF TOTAL EMPLOYMENT.
HE POINTED OUT THAT THE GOVERNMENT DID NOT SEEK TO INTERVENE IN THE MANUFACTURING SECTOR BECAUSE THE MARKET, NOT THE GOVERNMENT, WAS FAR MORE EFFICIENT IN ALLOCATING RESOURCES.
HE SAID THAT WHAT THE GOVERNMENT TRIED TO ENSURE WAS THAT HONG KONG HAD AN EFFICIENT INFRASTRUCTURE AND SUPPORTED ORGANISATIONS WHICH IN TURN SUPPORTED AND FACILITATED THE GROWTH AND DEVELOPMENT OF THE INDUSTRIAL BASE, WITHOUT TARGETTING SPECIFIC INDUSTRIES.
MR JACOBS MENTIONED A PROPOSAL ADVOCATED BY A RECENT CONSULTANCY REPORT ON THE PLASTICS CONVERSION INDUSTRY ON THE SETTING UP OF AN INDUSTRIAL LOAN FUND, WITH PARTICIPATION FROM BANKS, TO MAKE LOANS EXCLUSIVELY TO MANUFACTURING COMPANIES AT COMPETITIVE INTEREST RATES.
/+GIVIN