XN000022-1989-07-19 — Page 26

WEDNESDAY, JULY 19, 1989

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BANKING BILL GIVES EFFECT TO CHANGES TO THREE-TIER SYSTEM

ΤΟ

THE BANKING (AMENDMENT) (NO.2) BILL 1989 PROVIDES EFFECT CHANGES ΤΟ THE THREE-TIER SYSTEM OF DEPOSIT-TAKING INSTITUTIONS FOLLOWING A COMPREHENSIVE REVIEW WHICH INCLUDED EXTENSIVE CONSULTATION WITH THE BANKING SECTOR, THE ACTING FINANCIAL SECRETARY, THE HON DAVID NENDICK, TOLD THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).

IN MOVING THE SECOND READING, MR NENDICK SAID THE MAIN PURPOSE OF THE BILL WAS TO AMEND THE BANKING ORDINANCE TO GIVE EFFECT TO CERTAIN PROPOSED CHANGES ANNOUNCED BY THE GOVERNMENT IN MARCH THIS YEAR.

HE SAID THE OPPORTUNITY WAS ALSO BEING TAKEN ΤΟ INCORPORATE OTHER AMENDMENTS TO OVERCOME PROBLEMS AND REMOVE UNCERTAINTIES IDENTIFIED IN THE WORKING OF THE ORDINANCE.

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"ONE OF THE PRINCIPAL FEATURES OF OUR BANKING LEGISLATION IS TIGHT CONTROL EXERCISED OVER THE USE OF BANKING NAMES AND DESCRIPTIONS.

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PRESENT ONLY THOSE IN THE FIRST TIER, LICENSED BANKS, ALLOWED THE PRIVILEGE OF DESCRIBING THEMSELVES AS BANKS, THOSE IN THE OTHER TWO TIERS, LICENSED AND REGISTERED DEPOSIT-TAKING COMPANIES, CANNOT DO SO AND THIS HAS INHIBITED THOSE WHO WISH TO DEVELOP THEIR BUSINESS OVERSEAS, MR NENDICK EXPLAINED.

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"SUCH INSTITUTIONS, WHICH MAY WISH TO OPERATE INTERNATIONALLY, THE TERM 'DEPOSIT-TAKING COMPANIES' EITHER NOT UNDERSTOOD OR PEJORATIVE, AND HAVE EXPERIENCED DIFFICULTY IN GETTING RECOGNISED AND TREATED AS CREDIT-WORTHY, WELL SUPERVISED INSTITUTIONS,' HE ADDED.

TO OVERCOME THESE DIFFICULTIES, THE BILL REPLACES THE EXISTING CATEGORIES OF LICENSED DEPOSIT-TAKING COMPANY AND REGISTERED DEPOSIT- TAKING COMPANY IN THE ORDINANCE WITH THE CATEGORIES OF RESTRICTED LICENCE BANK AND DEPOSIT-TAKING COMPANY, MR NENDICK EXPLAINED.

CLAUSE 39 AMENDS SECTION 97 TO PROVIDE THAT RESTRICTED LICENCE BANKS MAY USE THE WORD "BANK" OR ITS DERIVATIVES IN DESCRIBING THEIR BUSINESS, PROVIDED THAT THIS IS QUALIFIED BY SUCH ADJECTIVES AS "RESTRICTED LICENCE", "MERCHANT" "INVESTMENT", "WHOLESALE", OR A TERM SPECIFIED BY THE COMMISSIONER OF BANKING BY NOTICE IN THE GAZETTE.

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OVERSEAS INCORPORATED BANKS AUTHORISED AS RESTRICTED LICENCE BANKS, AND OPERATING IN BRANCH FORM, WOULD BE ALLOWED TO USE THEIR CORPORATE NAMES WHICH INCLUDE THE WORD "BANK" PROVIDED THESE ARE QUALIFIED IN EQUAL PROMINENCE BY THE WORDS RESTRICTED LICENCE BANK" NEXT TO THEM.

"TO ENSURE THAT ONLY WELL CAPITALISED INSTITUTIONS ARE ENTRUSTED WITH PUBLIC DEPOSITS, THE MINIMUM CAPITAL REQUIREMENT FOR THE REGISTRATION OF NEW DEPOSIT-TAKING COMPANIES HAS ALREADY BEEN INCREASED FROM $10 MILLION TO $25 MILLION AS FROM MARCH 10, 1989," NENDICK SAID.

MR

/"TO REFLECT