FRIDAY, SEPTEMBER 30, 1994
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RELAXATION OF ONE-BUILDING CONDITION ON FOREIGN BANKS
THE
THE GOVERNMENT ANNOUNCED TODAY (FRIDAY) A RELAXATION OF "ONE BUILDING" CONDITION TO ALLOW A FOREIGN BANK LICENSED IN OR AFTER 1978 TO ESTABLISH A REGIONAL OFFICE AND ONE BACK OFFICE IN A BUILDING OR BUILDINGS SEPARATE FROM ITS BRANCH OFFICE IN HONG KONG.
THE RELAXATION IS TO BE IMPLEMENTED BY AN AMENDMENT TO THE "ONE BUILDING" CONDITION ATTACHED TO THE LICENCE OF FOREIGN BANKS AUTHORISED IN OR AFTER 1978.
THE "ONE
BUILDING" CONDITION WAS INTRODUCED IN 1978, AT THE SAME TIME AS THE MORATORIUM ON NEW BANKING LICENCES WAS LIFTED. THE OBJECTIVE OF THE CONDITION IS TO AVOID EXCESSIVE COMPETITION FOR RETAIL DEPOSITS IN THE RETAIL BANKING MARKET.
COSTS
THE RELAXATION IS DESIGNED TO HELP REDUCE THE OPERATING OF FOREIGN BANKS IN HONG KONG BY ALLOWING THEM TO SET UP REGIONAL OFFICES AND BACK OFFICES OUTSIDE CENTRAL SO AS TO ENHANCE HONG KONG'S ATTRACTION AS A REGIONAL BANK CENTRE.
A GUIDELINE ISSUED BY THE GOVERNOR-IN-COUNCIL TODAY SPECIFIES THAT THE ADDITIONAL REGIONAL AND BACK OFFICES ARE NOT ALLOWED TO ENGAGE IN BANKING BUSINESS OR TO ARRANGE OR ENTER INTO ANY FINANCIAL TRANSACTIONS THAT ARE NORMALLY TRANSACTED BETWEEN A BANK AND ITS CUSTOMERS OR COUNTERPARTIES.
"THE NEW POLICY WILL FACILITATE COST SAVINGS AND ALLOW GREATER ADMINISTRATIVE FLEXIBILITY FOR FOREIGN BANKS OPERATING IN HONG KONG. THIS WILL ENHANCE THE TERRITORY'S ATTRACTION AS A REGIONAL BANKING CENTRE WITHOUT CREATING EXCESSIVE COMPETITION FOR RETAIL DEPOSITS, ACTING CHIEF EXECUTIVE OF THE HONG KONG MONETARY AUTHORITY, MR DAVID CARSE, SAID.
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UNDER THE GUIDELINE ISSUED BY THE GOVERNOR-IN-COUNCIL, FOREIGN BANKS INTENDING TO OPEN ADDITIONAL OFFICES IN SEPARATE BUILDINGS ARE REQUIRED TO NOTIFY THE HONG KONG MONETARY AUTHORITY IN ADVANCE.
THE TYPICAL ACTIVITIES THAT A REGIONAL OFFICE MAY CARRY OUT INCLUDE STRATEGIC PLANNING OF REGIONAL OPERATIONS AND GENERAL LIAISON WITH CORRESPONDENT BANKS AND CORPORATE ENTITIES.
FUNCTIONS
A BACK OFFICE MAY CARRY OUT INTERNAL ADMINISTRATIVE BEHALF OF THE BRANCH OFFICE AND PROCESS OR SETTLE TRANSACTIONS ALREADY ENTERED INTO OR ARRANGED BY THE BRANCH OFFICE.
ON
THE RELAXATION APPLIES WITH IMMEDIATE EFFECT TO THE 106 FOREIGN BANKS LICENSED IN OR AFTER 1978 AND FOREIGN BANKS THAT WILL BE AUTHORISED IN THE FUTURE.
IT IS ALSO INTENDED TO APPLY THE REVISED CONDITION TO THOSE RESTRICTED LICENCE BANKS TO WHOM IT IS RELEVANT.
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