XN000022-1980-12-17 — Page 3

WEDNESDAY, DECEMBER 17, 1980

ASSOCIATION OF BANKS BILL PASSED

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THE LEGISLATIVE COUNCIL TODAY APPROVED WITH AMENDMENTS THE HONG KONG ASSOCIATION OF BANKS BILL WHICH SOUGHT TO INCORPORATE A NEW ASSOCIATION TO REPLACE THE EXCHANGE BANKS' ASSOCIATION AND TO INCLUDE ALL REGISTERED BANKS AS MEMBERS.

AT ITS SECOND READING, THE HON L FOOK-WO COMMENTED THAT AS THE NUMBER OF LICENSED BANKS HAD INCREASED FROM 74 IN 1977 TO THE PRESENT TOTAL OF 115, IT WAS APPROPRIATE FOR THE BANKING INDUSTRY TO BE BETTER COORDINATED IN THE BEST INTERESTS OF THE BANKS THEMSELVES AND OF THE COMMUNITY AS A WHOLE.

THIS IMPROVED COORDINATION WILL BE EFFECTED THROUGH THE INCORPORATION OF THE NEW ASSOCIATION. THIS ASSOCIATION WILL TAKE OVER THE FUNCTIONS OF THE EXCHANGE BANKS' ASSOCIATION, WHICH HAS HITHERTO ADMINISTERED THE INTEREST RATE AGREEMENT CURRENTLY FOLLOWED BY THE EBA MEMBER BANKS, + HE SAID.

ALTHOUGH THE AGREEMENT IS IN THEORY BINDING ON ALL MEMBERS, MR LI NOTED THAT THERE WAS IN PRACTICE VERY LITTLE THAT THE EBA, WHICH IS NOT A STATUTORY BODY, COULD DO SHOULD A BREACH OCCUR.

INTEREST RATES COULD BE DISRUPTED MERELY BECAUSE A FEW BANKS DECLINE TO COOPERATE AND, FURTHERMORE, OTHER EBA RULES COULD ONLY BE APPLIED THROUGHOUT THE BANKING INDUSTRY IF THERE IS VOLUNTARY ACCEPTANCE BY ALL ITS MEMBERS.

+ IT IS OBVIOUS THAT FOR ITS RULES TO BE MORE EFFECTIVE, MEMBERSHIP IN THE NEW ASSOCIATION MUST BE MANDATORY FOR ALL LICENSED BANKS OPERATING IN HONG KONG, HE SAID.

MR LI SAID THE UNOFFICIAL MEMBERS APPRECIATED THAT RESERVATIONS HAD BEEN EXPRESSED ON THE CLAUSE PROVIDING FOR THE OFFICES OF CHAIRMAN AND VICE-CHAIRMAN OF THE COMMITTEE OF THE NEW ASSOCIATION TO ALTERNATE BETWEEN THE CHARTERED BANK AND THE HONGKONG AND SHANGHAI BANKING CORPORATION.

HOWEVER SINCE THESE TWO BANKING INSTITUTIONS ARE BY LAW THE ONLY NOTE-ISSUING BANKS IN HONG KONG, IT IS BOTH SENSIBLE AND LOGICAL FOR THE CHAIRMANSHIP TO BE HELD IN ROTATION BETWEEN THEM FOR PERIODS OF TWO YEARS EACH, HE SAID.

THE HON WILLIAM BROWN, WHO IS THE CURRENT CHAIRMAN OF THE EXCHANGE BANKS' ASSOCIATION, SAID THE EBA SEES THE INCORPORATION OF THE HONG KONG ASSOCIATION OF BANKS AS A NECESSARY MOVE TO ENABLE THE BANKING INDUSTRY'S TRADE ASSOCIATION TO CONTINUE ITS FUNCTIONS IN THE INTERESTS OF ITS NOW WIDER MEMBERSHIP, AND THE PUBLIC AT LARGE.+

HE POINTED OUT THAT FOLLOWING THE GAZETTING OF THE BILL, THE EBA HAD INVITED ALL LICENSED BANKS TO SUBMIT THEIR COMMENTS BUT VERY FEW DID SO.

+THIS COULD PERHAPS BE MISTAKEN FOR INDIFFERENCE, OR APATHY, BUT FROM DISCUSSIONS WITH A FAIR CROSS-SECTION OF THE BANKING COMMUNITY I BELIEVE THE LACK OF COMMENT INDICATES GENERAL SUPPORT FOR THE BILL AS DRAFTED.

/+WITHOUT WISHING