XN000022-1991-05-08 — Page 7

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WEDNESDAY, MAY 8, 1991

TO REMEDY THESE DEFECTS, SIR PIERS SAID THE GOVERNMENT SOUGHT

COMMISSIONER TO EMPOWER THE

TO OBJECT, ON SPECIFIED GROUNDS, ΤΟ PERSONS BECOMING OR REMAINING CONTROLLERS OF AUTHORISED INSTITUTIONS INCORPORATED IN HONG KONG.

SEEK

"IN ADDITION, PROSPECTIVE CONTROLLERS WILL BE REQUIRED TO THE COMMISSIONER'S PRIOR APPROVAL BEFORE ACQUIRING THEIR HOLDINGS," HE SAID.

CENT OR THE PROPOSED

SIR PIERS SAID THIS WOULD APPLY TO HOLDINGS OF 10 PER MORE IN AN AUTHORISED INSTITUTION'S HOLDING COMPANY AND SYSTEN WAS SIMILAR TO TEAT CONTAINED IN THE INSURANCE COMPANIES

THE ON

BANKING ACT OF ORDINANCE, WHICH IN TURN WAS UNITED KINGDOM.

MODELLED

THE

"THE CONCEPT OF A CAPITAL BASE', WHICH WAS INTRODUCED INTO CALCULATION OF CAPITAL THE ORDINANCE IN 1986 IN CONNECTION WITH THE ADEQUACY RATIOS, IS NOW ACCEPTED AS A MORE APPROPRIATE MEASURE INSTITUTION'S ABILITY TO ABSORB RISK.

OF AN

AND 'CAPITAL EXPOSURE LIMITS UNDER EXPOSURE LIMITS, ALL THREE CLASSES

"THE PROPOSAL IS TO USE THIS CONCEPT IN PLACE OF RESERVES' AS THE BASIS FOR APPLYING THE LARGE PART XV OF THE ORDINANCE," HE SAID, ADDING THAT THE NOAPPLICABLE TO RANKS ONLY, WOULD BE APPLIED TO

OF INSTITUTIONS.

SIR PIERS SAID WHEN THE

INDUSTRY WAS

CONSULTED ON PROPOSED HAD EXPRESSED CHANGES TO PART XV, THE HONG KONG ASSOCIATION OF BANKS

OF EXEMPTION SOME CONCERN ABOUT THE PROPOSED REDUCTION OF THE PERIOD

MAXIMUM FROM THE

LENDING PRUDENT

LIMIT

FOR THE UNDERWRITING EQUITIES AND DERT FROM THP FXISTING THREE MONTHS TO SEVEN DAYS.

POTENTIAL

OF

EXPOSURE

AN

"THE PROPOSAL IS INTENDED TO ENABLE ANY EXCEEDING THE 25 PER CENT LIMIT TO BE BROUGHT UNDER SUPERVISION AT EARLY STAGE, HE SAID.

HE

་་

THAT EXPLAINED

THOSE

THE

LEAD WERE

AND COMMISSIONER

TO CONFINE ONCE THE BILL WAS

INSTITUTIONS WHICH UNDERWRITERS WOULD BE EXPECTED TO DISCUSS WITH AGREE UPON A SET OF LIMITS WITHIN WHICH THEY WOULD EXPECT THEIR RISKS IN RESPECT OF UNDERWRITING POSITIONS ENACTED.

COMMISSIONER WOULD BE

"ARMED WITH FORE-KNOWLEDGE OF WHAT THE PREPARED TO APPROVE WITHIN AGREED LIMITS, INSTITUTIONS SHOULD BE ABLE

FREELY AND WITHOUT TO OPERATE

ADHERING TO AN AGREFD

FRAMEWORK

DISRUPTION

THE WHICH LIMITS RISK

OF

MARKET, EXPOSURE,'

WHILST

L

SIR

PIERS SAID.

THAT NOTING

RIE. FINE

ENABLE

ALSO

TO SOPGITT

REMOVE CONTACT AND

UNNFUESSARY COLLABORATION AND ABROAD,

OF

RECEIVED

SIR FOR

BARRIERS TO DISCLOSERA TA BETWEEN BANKING AND OTHER FINANCIAL REGULATORS LOCALLY

INFORMATION PIERS SAID THE OVERALL CONFIDENTIALITY SUPERVISORY PURPOSES WAS, HOWEVER, PRESERVED.

DISCUSSED

COMMITTEE AND

WITH THE

"THE PRINCIPAL PROPOSALS IN THE BILL HAVE BEEN

THE BANKING ADVISORY

AND ARE SUPPORTED BY DEPOSIT-TAK|96_COMPANIES ADVISORY COMNETTEN, BF ADDED.

DEBATE ON THE BILL WAS ADJOURNED.

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