XN000022-1979-12-21 — Page 2

FRIDAY, DECEMBER 21, 1979

1

MINIMUM LIQUIDITY REQUIREMENTS FOR DEPOSIT-TAKING

COMPANIES EFFECTIVE JANUARY 1, 1980

*****

DEPOSIT-TAKING COMPANIES IN HONG KONG WILL, FROM THE

BEGINNING OF NEXT YEAR, HAVE TO MEET MINIMUM LIQUIDITY REQUIREMENTS AS SET OUT IN RECENT LÉGISLATION.

TODAY'S GOVERNMENT GAZETTE CARRIED A NOTICE STATING THAT THE GOVERNOR HAS APPOINTED JANUARY 1, 1980 AS THE DATE ON WHICH SECTION 9 OF THE DEPOSIT-TAKING COMPANIES (AMENDMENT) ORDINANCE 1978 WILL COME INTO OPERATION.

A GOVERNMENT SPOKESMAN EXPLAINED THAT THIS SECTION, AS AMENDED BY THE DEPOSIT-TAKING COMPANIES (AMENDMENT) (NO.2) ORDINANCE 1979, WHICH WAS PASSED BY LEGISLATIVE COUNCIL ON NOVEMBER 28, CONTAINS THE MINIMUM LIQUIDITY REQUIREMENTS WHICH WILL HAVE TO BE OBSERVED.

THE GAZETTE ALSO CONTAINED TWO NOTICES SIGNED BY THE FINANCIAL SECRETARY.

THE FIRST REQUIRES DEPOSIT-TAKING COMPANIES TO HOLD, IN THE FORM OF SPECIFIED LIQUID ASSETS, AN AMOUNT EQUIVALENT TO AT LEAST 30 PER CENT OF THEIR SHORT-TERM DEPOSITS. THIS SHOULD INCLUDE TIME DEPOSITS WHERE THE DEPOSITOR MAY OBTAIN REPAYMENT BEFORE THE MATURITY OF THE DEPOSIT. THEY SHOULD ALSO HOLD AN AMOUNT EQUAL TO AT LEAST 15 PER CENT OF THEIR REMAINING TIME DEPOSITS.

THE SECOND NOTICE REQUIRES AT LEAST 60 PER CENT OF THE MINIMUM LIQUID ASSETS NEEDED UNDER THE 30 PER CENT/15 PER CENT CALCULATION TO BE HELD IN THE FORM OF WHAT ARE KNOWN AS +SUPER-LIQUID ASSETS+ -- 1.E.

1.E. ASSETS WHICH CAN BE REALISED PARTICULARLY QUICKLY.

THE SPOKESMAN SAID THAT THE IMPLEMENTATION DATE OF JANUARY 1, 1980, AND THE FIGURES OF 30 PER CENT AND 15 PER CENT, HAD BEEN MENTIONED BY MR. PHILIP HADDON-CAVE, THE ACTING CHIEF SECRETARY IN THE LEGISLATIVE COUNCIL ON OCTOBER 17. THEY WERE NOW CONFIRMED BY THE NOTICES IN THE GAZETTE.

+THE 60 PER CENT SUPER-LIQUID ASSETS' REQUIREMENT IS EXACTLY PARALLEL TO THE REQUIREMENT CURRENTLY APPLIED TO BANKS,+ HE ADDED.

THE SPOKESMAN SAID THAT REVISED DEFINITIONS OF SPECIFIED LIQUID ASSETS FOR ALL LICENSED BANKS IN HONG KONG, AND REVISED RULES FOR THE LIQUIDITY CALCULATION, WOULD ALSO COME INTO OPERATION ON JANUARY 1, 1980.

THESE REVISIONS ARE SET OUT IN THE BANKING (AMENDMENT) (NO.2) ORDINANCE 1979, WHICH WAS PASSED BY THE LEGISLATIVE COUNCIL ON NOVEMBER 28. THE RELEVANT SECTIONS OF THAT ORDINANCE WILL COME INTO FORCE ON THE SAME DAY AS SECTION 9 OF THE DEPOSIT-TAKING COMPANIES (AMENDMENT) ORDINANCE 1978 - 1.E. JANUARY 1, 1980.

-

12