XN000022-1993-01-12 — Page 18

17

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TUESDAY, JANUARY 12, 1993

BELIEVE, HOWEVER,

"WE

THAT THERE ARE VALID ARGUMENTS FOR PROVIDING A FURTHER MEASURE OF PROTECTION TO SMALL DEPOSITORS, IF THIS CAN BE DONE IN A WAY WHICH IS WIDELY ACCEPTABLE AND WHICH DOES NOT JEOPARDISE THE INTEGRITY OF THE BANKING SYSTEM, HE ADDED.

IF

"WE

HAVE THEREFORE EXPLORED A PROPOSAL FOR GIVING PRIORITY TO SMALL DEPOSITORS IN THE EVENT OF THE WINDING UP OF A BANK, HE SAID.

"I

THIS CONCEPT HAS BEEN EXAMINED BY THE STANDING COMMITTEE COMPANY LAW REFORM AND IT HAS GIVEN ITS SUPPORT.

ON

THE SPOKESMAN SAID THE PROPOSAL HAD CERTAIN ADVANTAGES COMPARED WITH A DPS ON THE LINES SET OUT IN THE GOVERNMENT'S CONSULTATION PAPER, INCLUDING THE AVOIDANCE OF THE ARBITRARINESS AND INEQUITY INEVITABLE IN A PREMIUM LEVYING SYSTEM, AND LESS LIKELIHOOD OF DISTORTIONS то THE PRESENT WAY IN WHICH BANKS CONDUCTED THEIR BUSINESS.

FURTHERMORE, THERE WOULD BE

NO SIGNIFICANT

ONGOING

ADMINISTRATIVE COSTS.

HE ADDED THAT THE ARRANGEMENT WOULD HAVE TO GO HAND IN WITH A CONTINUING EFFECTIVE SUPERVISORY SYSTEM.

IN

HAND

"OUR SUPERVISORY SYSTEM BEARS FAVOURABLE COMPARISON WITH THAT OTHER MAJOR FINANCIAL CENTRES AND WAS EFFECTIVE IN MAINTAINING A RELATIVELY HIGH ASSET QUALITY AND LIQUIDITY IN THE CASE OF BANK OF CREDIT AND COMMERCE HONG KONG.

OF

"THIS CONTRIBUTED TO THE ACCEPTABILITY TO THE VAST MAJORITY THE LARGE CREDITORS IN THAT LIQUIDATION OF THE SCHEME OF ARRANGEMENT GIVING PRIORITY TO SMALLER DEPOSITORS.

"THE SUPERVISORY SYSTEM WILL CONTINUE TO BE KEPT UNDER REGULAR REVIEW AND REFINEMENTS MADE AS AND WHEN THE NEED ARISES,

++ HE SAID.

HE EMPHASISED THAT BEFORE PUTTING FORWARD LEGISLATIVE PROPOSALS WITH REGARD TO THE PRIORITY SCHEME, THERE WOULD HAVE TO BE CAREFUL ANALYSIS AND STUDY ON A NUMBER OF ISSUES SUCH AS THE DEFINITION OF SMALL DEPOSITORS AND THE LEGAL IMPLICATIONS ON THE LIQUIDATION PROCESS.

"IT WAS HOPED, HOWEVER, TO INTRODUCE LEGISLATION NEXT LEGISLATIVE SESSION, HE SAID.

+

DURING THE

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