XN000022-1974-01-09 — Page 7

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Wedresday, January 9, 1974

GREATER PROTECTION FOR DEPOSITORS

******

New legislation specifying the minimum size of deposits which

finance companies can accept from the general public is expected to be

introduced soon, the Financial Secretary, the Hon. C.P. Haddon-Cave, disclosed

today.

Replying to a question from the Hon. G.M. Sayer, the Financial

Secretary said that while he was not dissatisfied with the operating standards

of reputable companies accepting deposits in Hong Kong, he recognised that

there was a possibility of less reputable companies operating to lower

standards thus providing some risk for depositors.

However, under the proposed new bill the deposit-taking activities

of finance companies would be confined to a fairly restricted alientele by

specifying a minimum figure below which only licensed banks will be permitted

to accept deposits, he said.

In answer to another question, Mr. Haddon-Cave said he remained

convinced that licensed banks had the means at their command to compete on

equal terms with the finance companies.

"It is true that licensed banks have to meet capital and liquidity

provisions set by the Banking Ordinance and to this extent they may feel that

they are unfairly restricted.

"But the facts do not match this feeling. Banking licences continue

to be much sought after and there are many concerns, both overseas and local,

which have expressed a wish for a banking licence," he said.

Only a few finance companies had established local business, he

noted, and the majority did not compete directly with the local banks because

their business was directed to the supply of credit for current liabilities

and capital projects elsewhere in the Far East.

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