XN000022-1981-05-27 — Page 3

WEDNESDAY, MAY 27, 1981

THIS REVIEW HAS BEEN CONDUCTED AS PART OF A SEQUENCE OF WORK ON THE MONETARY SECTOR IN HONG KONG, INCLUDING THE COLLECTION OF A NEW SERIES OF MONETARY STATISTICS THE ESTABLISHMENT OF HONG KONG ASSOCIATION OF BANKS AS A STATUTORY BODY- THE CREATION OF A NEW CATEGORY OF LICENSED DEPOS IT-TAK ING COMPANY- AND THE

IMPROVEMENT OF THE PRUDENTIAL SUPERVISION OF BANKS AND DEPOSIT-TAKING COMPANIES. THIS SEQUENCE OF WORK IS NOT COMPLETED WITH THIS REVIEW OF BANK LICENSING POLICY: THE FINANCIAL SECRETARY REFERRED IN HIS STATEMENT TODAY TO TWO AREAS ON WHICH WORK IS CONTINUING, NAMELY THE TAXATION TREATMENT OF INTEREST EARNED ON FOREIGN CURRENCY DEPOSITS IN HONG KONG- AND THE SUPERVISION OF ACTIVITIES CARRIED ON OUTSIDE HONG KONG BY LOCALLY INCORPORATED BANKS AND DEPOSIT-TAKING COMPANIES.

BANKING AND DEPOS IT-TAKING COMPANIES BILLS BECOME LAW

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AMENDMENTS WERE INTRODUCED INTO THE DEPOSIT-TAKING COMPANIES (AMENDMENT) (NO. 2) BILL 1981 BEFORE IT WAS PASSED INTO LAW TOGETHER WITH THE BANK ING (AMENDMENT) BILL 1981 IN THE LEGISLATIVE COUNCIL TODAY.

THE AMENDMENTS WERE TO RELAX THE MINIMUM PAID-UP SHARE CAPITAL REQUIREMENT FOR DEPOSIT-TAKING COMPANIES FROM $100 MILLION TO $75 MILLION, BUT AT THE SAME TIME, TO PROVIDE THAT EACH APPLICANT SHOULD ALSO HAVE A MINIMUM ISSUED SHARE CAPITAL OF $100 MILLION.

SPEAKING AT THE RESUMED DEBATE OF THE DEPOS IT-TAK ING COMPANIES BILL THE FINANCIAL SECRETARY, THE HON SIR PHILIP HADDON-CAVE SAID THE UNPAID SHARE CAPITAL OF UP TO $25 MILLION WOULD REPRESENT A FIRM COMMITMENT BY THE SHAREHOLDERS, A COMMITMENT WHICH COULD BE CALLED ON IN CASE OF NEED AND WHICH WAS PERMANENTLY IN PLACE, UNLIKE SUBORDINATED LOAN STOCK OR SIMILAR VARIETIES OF CAPITAL.

SIR PHILIP SAID BOTH THESE MINIMA COULD BE AMENDED BY THE GOVERNOR IN COUNCIL AT ANY TIME.

THE OTHER AMENDMENTS WERE TO PREVENT A REGISTERED DEPOSIT- TAKING COMPANY FROM TAKING ANY SHORT-TERM DEPOSITS FROM A BANK OUTSIDE HONG KONG WHICH WAS NOT LICENSED UNDER THE BANK ING ORDINANCE, AND THEY WERE DESIGNED TO REMOVE THE INTERFERENCE WITH NORMAL TRANSACTIONS ON THE INTERNATIONAL MONEY MARKETS.

SIR PHILIP SAID THESE AMENDMENTS MADE IT CLEAR THAT REGISTERED DEPOSIT-TAKING COMPANIES MIGHT CONTINUE TO TAKE SHORT-TERM DEPOSITS FROM BANKS IN HONG KONG AND OVERSEAS, AND ALSO, FOR THE AVOIDANCE OF A MINOR RESIDUAL DOUBT AS TO THE PRECISE IMPACT OF THE AMENDING BILL AS DRAFTED, FROM OTHER DEPOSIT-TAKING COMPANIES.

JUNOFFICIAL MELBERS