XN000022-1980-11-05 — Page 11

WEDNESDAY, NOVEMBER 5, 1980

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REVIEW OF BANK LICENSING POLICY

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A REVIEW OF THE CRITERIA AGAINST WHICH APPLICATIONS FOR BANKING LICENCES WERE CONSIDERED, AND OF BANK LICENSING POLICY GENERALLY, HAD BEEN UNDERTAKEN BUT IT WOULD NOT BE APPROPRIATE TO FINALIŠE THE REVIEW NOW, PENDING PROGRESS ON THREE OTHER ISSUES, THE FINANCIAL SECRETARY, THE HON SIR PHILIP HADDON-CAVE TOLD THE LEGISLATIVE COUNCIL TODAY.

IN REPLY TO A QUESTION BY THE HON OSWALD CHEUNG, SIR PHILIP SAID THE THREE ISSUES WERE:

IMPLEMENTATION OF THE MONETARY STATISTICS ORDINANCE

INTRODUCTION OF THE NEW REPORTING REQUIREMENTS ON BANKS

AND DEPOSIT-TAKING COMPANIES WILL, INITIALLY AT ANY RATE, PLACE A HEAVY BURDEN ON THE RESOURCES OF THE MONETARY AFFAIRS BRANCH AND SIR PHILIP SAID HE DID NOT WANT THE SUCCESS OF THIS EXERCISE PREJUDICED BY OTHER PREOCCUPATIONS.

INCORPORATION OF A NEW HONG KONG ASSOCIATION OF BANKS

THE ADVICE OF THE EXECUTIVE COUNCIL WILL BE SOUGHT LATER THIS MONTH AS TO WHETHER A BILL TO INCORPORATE SUCH AN ASSOCIATION, TO TAKE OVER THE FUNCTIONS OF THE EXCHANGE BANKS* ASSOCIATION, SHOULD BE PUT TO THE LEGISLATIVE COUNCIL FOR ENACTMENT BY THE END OF THIS YEAR.

+ IT IS IMPORTANT THAT THIS PARTICULAR REFORM OF OUR INSTITUTIONAL ARRANGEMENTS SHOULD HAVE BEEN COMPLETED BEFORE WE COME TO ANY CONCLUSIONS ABOUT THE FUTURE SIZE OF THE BANKING INDUSTRY, SIR PHILIP SAID.

REVISION OF THE BANKING AND THE DEPOSIT-TAKING COMPANIES ORDINANCE

A NUMBER OF AMENDMENTS ARE NECESSARY TO IMPROVE THE QUALITY OF THE PRUDENTIAL SUPERVISION EXERCISED OVER THE ACTIVITIES IN HONG KONG OF BANKS AND DEPOSIT-TAKING COMPANIES.

AT THE SAME TIME, SIR PHILIP SAID, THE SECRETARY FOR MONETARY AFFAIRS AND HE ARE CONSIDERING HOW BEST TO DEFINE THE TYPE OF BUSINESS WHICH BANKS AND DEPOSIT-TAKING COMPANIES CAN UNDERTAKE AND THE IMPLICATIONS FOR THE MARKET AS A WHOLE AND FOR MONETARY POLICY OF DIFFERENT WAYS OF DEFINING THE BORDERLINE.

+THIS QUESTION OF DEFINITION IS CLEARLY A FUNDAMENTAL QUESTION ON WHICH DIAMETRICALLY OPPOSING VIEWS ARE HELD, AND IT NEEDS TO BE SETTLED BEFORE REACHING ANY CONCLUSIONS ON WHETHER OR NOT TO GRANT FURTHER BANK LICENCES, HE SAID.

SIR PHILIP HOPED THESE TASKS WOULD BE COMPLETED BY EARLY NEXT YEAR. WE SHALL THE PROCEED, IN A LOGICAL SEQUENCE, TO COMPLETE OUR REVIEW OF BANK LICENSING POLICY, HE SAID.

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