XN000022-1986-02-26 — Page 40

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WEDNESDAY, FEBRUARY 26, 1986

+THOUGH IT IS IMPOSSIBLE TO SUIT ALL INTERESTS, THERE HAS RESULTED A GENERAL CONSENSUS ON A COMPREHENSIVE PACKAGE, AND ON THE NEED FOR A SINGLE PIECE OF NEW LEGISLATION TO REPLACE THE PRESENT BANKING AND DEPOSIT-TAKING COMPANIES ORDINANCES,+ SIR JOHN SAID.

HE ADDED THAT DURING THE PROCESS OF CONSULTATION IT WAS REPEATEDLY EMPHASIZED BY THE BANKING INDUSTRY THAT THE QUALITY AND ADEQUACY OF THE STAFF IN THE COMMISSION WAS CRUCIAL TO EFFECTIVE SUPERVISION.

+THE COMMISSIONER HAS ARRANGED - AND WILL CONTINUE TO ARRANGE TRAINING AND DEVELOPMENT FOR HIS PROFESSIONAL STAFF. THE DRAFT ESTIMATES OF EXPENDITURE I AM PRESENTING ALSO CONTAIN APPROPRIATE INCREASES IN RESOURCES FOR THE COMMISSION, SIR JOHN SAID.

HE ADDED THAT THE GOVERNMENT WAS DETERMINED TO PROMOTE SOUND BUSINESS PRACTICE AMONG ALL FINANCIAL INSTITUTIONS AND TO PROVIDE A MEASURE OF PROTECTION FOR DEPOSITORS,

WHILE THERE WOULD BE SUSTAINED EFFORTS TO IMPROVE PRUDENTIAL SUPERVISION, SIR JOHN SAID, IT HAD TO BE REALISED THAT THIS DID NOT AND COULD NOT PROVIDE A FOOLPROOF SYSTEM WHICH FULLY SAFEGUARDED ALL INTERESTS.

IS

+OUR BANKING SYSTEM, DESPITE RECENT DIFFICULTIES, INTRINSICALLY SOUND. BUT IT MUST DEPEND ON HONEST PRACTICES.

+ IN THE FINAL ANALYSIS THE INTEGRITY OF THE SYSTEM RESTS ON THE BEHAVIOUR OF OUR BANKERS, WHO BEAR THE TRUST OF THE COMMUNITY, + HE SAID.

SIR JOHN SAID THE INTENSIVE CONSULTATIONS CARRIED OUT IN THE PAST YEAR OR SO ALSO FOCUSSED ON WHETHER THERE SHOULD BE SOME FORM OF DEPOSIT INSURANCE.

+ALL RECOGNISED THAT THE PROTECTION OF DEPOSITORS WAS IMPORTANT. THERE WAS, HOWEVER, ALSO GENERAL AGREEMENT THAT PRACTICAL DIFFICULTIES MAKE DEPOSIT INSURANCE A NON-STARTER IN HONG KONG.

THE MAJOR BANKING GROUPS WOULD HAVE TO BEAR AN UNFAIR SHARE OF THE BURDEN, SIR JOHN SAID, ADDING THAT DEPOSIT INSURANCE COULD NOT PREVENT THE PROBLEMS OF ONE BANK SPREADING ACROSS THE BANKING SYSTEM AS A WHOLE AS A RESULT OF INTER-BANK RELATIONSHIPS.

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