XN000022-1989-07-19 — Page 27

WEDNESDAY, JULY 19, 1989

"TO

REFLECT

25

THE ADDITIONAL

STATUS

AND

PRIVILEGES OF INFLATION OVER

THE

THE

RESTRICTED LICENCE BANKS AND TAKING ACCOUNT OF PAST FEW YEARS, CLAUSE 12 REQUIRES THESE INSTITUTIONS TO HAVE A PAID- UP

CAPITAL OF $100 MILLION AS AGAINST THE PRESENT REQUIREMENT OF

HE ADDED. MILLION FOR LICENSED DEPOSIT-TAKING COMPANIES,

$75

OF

EXISTING DEPOSIT-TAKING COMPANIES WILL HAVE A GRACE PERIOD

NEW REQUIREMENT. TWO YEARS FROM MARCH 10, 1989 TO COMPLY WITH THE CONSEQUENT TO THIS INCREASE, CLAUSE 7 AMENDS SECTION 18 TO RAISE MINIMUM CAPITAL LEVEL FOR LICENSED BANKS FROM $100 MILLION MILLION

REQUIREMENT ΤΟ REFLECT THE HIGHER CAPITAL LICENSED BANKS.

THE TO $150 то

APPROPRIATE

COMMISSIONER

SECTION 63 OF THE BANKING ORDINANCE EMPOWERS THE OF BANKING TO REQUIRE INFORMATION FROM AUTHORISED INSTITUTIONS IF SUCH

PROPER UNDERSTANDING INFORMATION

"NECESSARY IS

FOR THE FINANCIAL POSITION OF THE INSTUTITION".

OF THE

ΤΟ ENABLE THE EFFECTIVELY.

INFORMATION NENDICK

RESTRICTIVE. "THIS IS CONSIDERED TO BE TOO COMMISSIONER TO DISCHARGE HIS STATUTORY RESPONSIBILITIES HE NEEDS TO HAVE RELATIVELY UNFETTERED POWER TO OBTAIN FROM AUTHORISED INSTITUTIONS AND THEIR RELATED COMPANIES." SAID.

THE

"CLAUSE 26 (A) THEREFORE AMENDS SECTION 63(2) TO EMPOWER COMMISSIONER TO REQUIRE ANY AUTHORISED INSTITUTION OR ITS SUBSIDIARIES SUBMIT TO HIM INFORMATION THAT MAY REASONABLY BE REQUIRED FOR EXERCISE OF HIS FUNCTIONS UNDER THE ORDINANCE," HE ADDED.

ΤΟ

BANKING

THE

THAT

OR MORE

ORDINANCE PROVIDES 81(1)(B)(1) OF THE SECTION THE FINANCIAL EXPOSURE OF AN AUTHORISED INSTITUTION TO TWO COMPANIES WHICH ARE SUBSIDIARIES OF THE SAME HOLDING COMPANY SHALL NOT AND EXCEED AN AMOUNT EQUIVALENT TO 25 PER CENT OF THE PAID-UP CAPITAL RESERVES OF THE INSTITUTION.

IN THE SECTION "SINCE THE TERM *THE SAME HOLDING COMPANY' INCLUDES AUTHORISED INSTITUTIONS, THE LIMITATION ON FINANCIAL EXPOSURE AUTHORISED CONTAINED IN THE SECTION THEREFORE APPLIES TO EXPOSURE OF INSTITUTIONS TO THEIR OWN SUBSIDIARIES.

PER "IT FOLLOWS FROM THIS THAT A BANK CANNOT LEND MORE THAN 25 CENT OF ITS OWN CAPITAL TO ITS OWN SUBSIDIARIES, EVEN THOUGH THOSE ARE " MR NENDICK SUBJECT TO THE COMMISSIONER'S CONSOLIDATED SUPERVISION, SAID.

THAT

"TO REMOVE THIS ANOMALY, CLAUSE 33 AMENDS SECTION 81 TO PROVIDE SECTION MAY BE EXEMPTED FROM INSTITUTION AN AUTHORISED

ITSELF THE CONTROLLER OF THE 81(1)(B)(1) WHERE THE INSTITUTION IS

BE SUBJECT SUBSIDIARIES CONCERNED, BUT THAT SUCH AN EXEMPTION SHALL TO THE PRIOR APPROVAL OF THE COMMISSIONER AND TO SUCH CONDITIONS AS

HE EXPLAINED. HE MAY THINK PROPER TO ATTACH THERETO,

"THIS DISCRETION IS INTENDED TO BE USED SPARINGLY, COMMISSIONER IS SATISFIED THAT NO CREDIT RISK ON A

HE ADDED. SHOULD EXCEED THE 25 PER CENT LIMIT,

THE

AND WHERE GROUP BASIS

/FOLLOWING A