XN000022-1994-08-31 — Page 5

WEDNESDAY, AUGUST 31, 1994

THE HKMA WILL UNDERTAKE A REVIEW IN MID-1995 ON THE DISCLOSURE OF BALANCE SHEET INNER RESERVES IN THE LIGHT OF THE EXPERIENCE OF THE ADDITIONAL DISCLOSURES IN THE 1994 ACCOUNTS.

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IT WILL SHARE AND DISCUSS THE CONCLUSIONS OF THE REVIEW WITH EXCHANGE AND SFC BEFORE A DECISION IS MADE ON WHETHER OR NOT TO RECOMMEND DISCLOSURE OF BALANCE SHEET INNER RESERVES IN THE 1995 ACCOUNTS.

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THE SFC AND THE EXCHANGE HAVE AGREED TO DEFER THE PROPOSAL REQUIRE IMMEDIATE DISCLOSURE OF THEIR INNER RESERVES BY BANKS APPLYING FOR A LISTING AND BY LISTED BANKS SEEKING TO RAISE ADDITIONAL CAPITAL, PENDING THE OUTCOME OF THE HKMA REVIEW.

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THE DEPUTY CHIEF EXECUTIVE (BANKING) OF THE HKMA, MR DAVID CARSE, SAID: "THE JOINT RECOMMENDATIONS REPRESENT A CO-ORDINATED EFFORT BY THE HKMA, THE EXCHANGE AND THE SFC TO IMPROVE FINANCIAL DISCLOSURE BY AUTHORISED INSTITUTIONS IN HONG KONG.

"ALTHOUGH THE BEST PRACTICE GUIDE ON FINANCIAL DISCLOSURE TO BE ISSUED BY THE HKMA WILL NOT HAVE STATUTORY POWER, THE HKMA BELIEVES THAT THE RECOMMENDATIONS FOR MORE DISCLOSURE ARE IN THE BEST INTERESTS OF BOTH INDIVIDUAL INSTITUTIONS AND OF HONG KONG'S POSITION AS AN INTERNATIONAL FINANCIAL CENTRE.

"THE HKMA CONSIDERS THEREFORE THAT THOSE INSTITUTIONS COVERED BY THE RECOMMENDATIONS SHOULD FOLLOW THEM IN THEIR 1994 ACCOUNTS."

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THE EXECUTIVE DIRECTOR AND HEAD OF LISTING AT THE EXCHANGE, HERBERT HUI, SAID THE EXCHANGE WELCOMED THE PROPOSALS PUT FORWARD THE HKMA AND CONSIDERED THAT THEIR ADOPTION WOULD ENHANCE CONSIDERABLY THE TRANSPARENCY OF LOCAL BANK REPORTING.

"THE EXCHANGE PROPOSES TO AMEND THE LISTING RULES TO REQUIRE THAT ALL LISTED BANKS COMPLY WITH THE DISCLOSURE PROVISIONS TO BE INCLUDED IN THE BEST PRACTICE GUIDE.

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THE EXECUTIVE DIRECTOR OF THE SFC, MRS LAURA CHA, SAID THE CLOSE CO-OPERATION BETWEEN THE REGULATORY AUTHORITIES AND THE INDUSTRY IN ADOPTING THIS PACKAGE IN SUCH A SHORT TIME WAS COMMENDABLE.

"IT DEMONSTRATES OUR COMMITMENT TOWARDS ACHIEVING FULL DISCLOSURE IN THE FINANCIAL STATEMENTS OF LISTED BANKS. WHILE WE HAVE AGREED THAT INNER RESERVES WILL NOT BE REVIEWED UNTIL 1995, THE ADDITIONAL LEVEL OF BALANCE SHEET DISCLOSURE REQUIRED FOR YEAR END 1994 IS SIGNIFICANTLY GREATER THAN THAT ORIGINALLY PROPOSED BY THE SFC AND THE EXCHANGE.

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