XN000022-1993-06-25 — Page 13

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FRIDAY, JUNE 25, 1993

THE

INTRODUCING THE MAIN AMENDMENTS TO THE BANKING ORDINANCE, SPOKESMAN SAID FOLLOWING THE COLLAPSE OF THE BCCI GROUP, THE BASLE COMMITTEE OF BANKING SUPERVISORS ISSUED IN JULY 1992 A SET OF NEW MINIMUM STANDARDS ON THE SUPERVISION OF INTERNATIONAL BANKING GROUPS AND THEIR CROSS BORDER ESTABLISHMENTS.

'THE OBJECTIVE OF THE NEW STANDARDS IS TO SEEK WORLDWIDE SUPERVISORY CO-OPERATION ΤΟ ENSURE THAT NO BANK CAN OPERATE INTERNATIONALLY WITHOUT BEING SUBJECT TO EFFECTIVE CONSOLIDATED SUPERVISION BY A RESPONSIBLE BANKING AUTHORITY, THE SPOKESMAN SAID.

ALTHOUGH HONG KONG'S FRAMEWORK OF CONSOLIDATED SUPERVISION OF BANKS' GLOBAL OPERATIONS LARGELY CONFORMS WITH THE BASLE MINIMUM STANDARDS, THE EXISTING PROVISIONS GOVERNING THE PRIOR APPROVAL OF THE ESTABLISHMENT OF OVERSEAS BANKING ENTITIES BY LOCALLY INCORPORATED AUTHORISED INSTITUTIONS DOES NOT MEET THE NEW STANDARDS FULLY.

AT PRESENT, THE PRIOR APPROVAL OF THE MONETARY AUTHORITY IS REQUIRED ONLY FOR THE ESTABLISHMENT OF AN OVERSEAS BRANCH OR AN OVERSEAS REPRESENTATIVE OFFICE,

THERE IS NO PARALLEL REQUIREMENT GOVERNING THE ESTABLISHMENT OF A BANKING SUBSIDIARY.

"EXPERIENCE HAS SHOWN THAT SERIOUS PROBLEMS IN AN OVERSEAS BANKING SUBSIDIARY COULD BE DAMAGING TO CONFIDENCE IN THE PARENT BANK AND, IN MANY RESPECTS, AN OVERSEAS SUBSIDIARY DEMANDS THE SAME BREADTH OF PARENTAL COMMITMENT AS AN OVERSEAS BRANCH," THE SPOKESMAN SAID.

EVEN WHERE THE OVESEAS BANKING SUBSIDIARY IS OWNED BY THE AUTHORISED INSTITUTION'S HOLDING COMPANY, THERE MAY BE A RISK OF CONTAGION TO THE INSTITUTION, PARTICULARLY IF THERE IS A CLEAR NAME ASSOCIATION, HE ADDED.

THE SPOKESMAN SAID AN AMENDMENT WAS THEREFORE SOUGHT SO THAT A LOCALLY INCORPORATED AUTHORISED INSTITUTION, OR ITS LOCALLY INCORPORATED HOLDING COMPANY, SHOULD BE REQUIRED TO SEEK THE MONETARY AUTHORITY'S PRIOR APPROVAL FOR THE ESTABLISHMENT OR ACQUISITION OF AN OVERSEAS BANKING SUBSIDIARY.

"THIS AMENDMENT WOULD ENSURE THAT HONG KONG'S SYSTEM OF BANKING SUPERVISION CONTINUES ΤΟ MEASURE UP TO THE HIGHEST INTERNATIONAL STANDARDS, HE ADDED.

་་

HE SAID ANOTHER

SIGNIFICANT PROVISION OF THE BILL WAS TO SHORTEN THE PERIOD OF TIME WITHIN WHICH A LOCALLY INCORPORATED AUTHORISED INSTITUTION SHOULD PUBLISH ITS ANNUAL. AUDITED FINANCIAL STATEMENTS IN THE NEWSPAPERS.

"IT IS PROPOSED THAT' THE SIX-MONTH DEADLINE FOR LOCALLY INCORPORATED AUTHORISED INSTITUTIONS TO PUBLISH THEIR ANNUAL AUDITED FINANCIAL STATEMENTS SHOULD BE REDUCED TO FOUR MONTHS, THE SPOKESMAN SAID.

"

ΤΟ THE PROVIDE AND THE

THIS WILL HELP THE AUDITORS TO CO-ORDINATE THEIR AUDIT WORK ON AUTHORISED INSTITUTIONS WITH THE REPORTS WHICH THEY SUBMIT MONETARY AUTHORITY UNDER THE BANKING ORDINANCE. IT WILL ALSO MORE TIMELY INFORMATION TO DEPOSITORS, THE GENERAL PUBLIC SUPERVISORS.'

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/FOR OVERSEAS