XN000022-1989-05-31 — Page 35

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WEDNESDAY, MAY 31, 1989

THE ORDINANCE PROVIDES FOR A MINIMUM RATIO OF FIVE PER WITH POSSIBLE MAXIMUMS OF EIGHT PER CENT FOR BANKS AND 10 PER FOR DTCS.

CENT,

CENT

"I AM PLEASED WITH THE WAY THE CAPITAL ADEQUACY RATIO EXERCISE HAS WORKED OUT, HE SAID. "A GREAT DEAL OF TIME AND EFFORT WAS SPENT IN DISCUSSING AND AGREEING APPROPRIATE RATIOS WITH INSTITUTIONS, THE RESULT THAT THE ACTUAL COMING INTO FORCE OF THE RELEVANT PROVISION PASSED VERY SMOOTHLY.

WITH LEGAL

"IN FACT, THE INSTITUTIONS SUBJECT TO STILL ARE WELL CAPITALISED.

THE

RATIO WERE

-

AND

"THIS HAS MEANT IN TURN THAT HONG KONG WILL BE ABLE TO MOVE

THAN MORE QUICKLY

SOME OTHER FINANCIAL CENTRES IN ADOPTING THE WORLD-WIDE STANDARD RATIO SUGGESTED BY THE BASLE COMMITTEE ON BANKING REGULATIONS AND SUPERVISORY PRACTICES.

"THIS CALLS FOR A MINIMUM OF EIGHT PER CENT BY END-1992, BUT EXPECT WE WILL ACHIEVE THAT MUCH EARLIER.

"

I

MR NICOLLE SAID HIS OFFICE HAD CONDUCTED A SURVEY OP PROPERTY LENDING DURING THE YEAR. "THERE WAS STRONG DEMAND IN THE LOCAL

MY PROPERTY MARKET AND IT WAS CLEARLY IMPORTANT FOR

KEEP OFFICE TO

TO THIS, HE TRACK OF HOW INSTITUTIONS, IN GENERAL, WERE RESPONDING SAID.

то WHICH SOME

"ONE NOTICEABLE POINT TO EMERGE WAS THE EXTENT INSTITUTIONS CONSIDERED SECURITY TO BE THE MAJOR FACTOR INFLUENCING DECISION TO LEND, HE ADDED.

"

"GOOD SECURITY IS OF COURSE IMPORTANT TO SHOULD ONLY PROVIDE A SECOND LINE OF DEFENCE. THE BE THE BORROWER'S ABILITY TO REPAY. EITHER FROM CASH FLOW IN THE OF A COMPANY, OR FROM INCOME FOR A PERSONAL BORROWER."

ANY

BANKER,

IT VITAL FACTOR MUST CASE

BUT

MR NICOLLE NOTED THAT HIS OFFICE'S RELATIONS WITH AUDITORS CONTINUED TO BE FRUITFUL AND CONSTRUCTIVE.

HAD

MEETINGS

{I.E. BETWEEN

THE

HE SAID THAT 33 TRIPARTITE COMMISSIONER, AN INSTITUTION AND ITS AUDITOR) HAD BEEN HELD.

←

AN

AND

INDICATION,

I

SECTORS AUDITING AN EARLY STAGE,

"THIS WAS ALMOST TWICE THE NUMBER IN 1987 FEEL, OF A HEIGHTENED AWARENESS IN THE BANKING OF THE BENEFITS OF DISCUSSING POTENTIAL PROBLEMS AT RATHER THAN OF AN INCREASE IN SUCH PROBLEMS, MR NICOLLE SAID.

"

HE ADDED THAT THE HONG KONG SOCIETY OF ACCOUNTANTS A GUIDELINE TO ITS MEMBERS WHICH SOUGHT TO CLARIFY THE WHICH SHOULD MEETING.

PROMPT AUDITORS

HAD ISSUED

CIRCUMSTANCES TRIPARTITE

A CONVENING

TO CONSIDER

THE REPORT, THE THIRD MADE UNDER WILL GO ON SALE THIS AFTERNOON AT THE GOVERNMENT PUBLICATIONS CENTRE, IN CONNAUGHT PLACE, CENTRAL. AT $21 PER COPY.

THE 1986

BANKING

ORDINACE,

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