Capital to risk assets ratio.
Third Schedule.
Failure to keep to capital to risk assets ratio.
Remedial action.
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(2) Nothing in this section shall apply to any association of banks formed for the protection or promotion of their mutual interests or to any association of employees of banks formed for the protection or promotion of the mutual interests of such employees.
PART XVII
CAPITAL TO RISK ASSETS
RATIO OF AUTHORIZED INSTITUTIONS
102. (1) Subject to this Part and Part X, an authorized institution incorporated in Hong Kong shall not, at any time, have a capital to risk assets ratio of less than 5 per cent as calculated in accordance with the provisions of the Third Schedule and subsection (2).
(2) For the purposes of calculating the capital to risk assets ratio of an authorized institution, the accounts of the institution are not required to be on a consolidated basis unless the Commissioner otherwise determines in any particular
case.
(3) The Financial Secretary may, by notice in the Gazette, vary the percentage specified in subsection (1).
103. (1) Where an authorized institution contravenes section 102(1), it shall forthwith notify the Commissioner of that contravention and provide him with such particulars of that contravention as he may require.
(2) Where the Commissioner is notified under subsection (1) of a contravention of section 102(1), he shall forthwith notify the Financial Secretary of that contraven- tion and provide him with such particulars of that contravention as he may require.
(3) Every director and every manager of an authorized institution which contravenes subsection (1) commits an offence and is liable on conviction upon indictment to a fine of $500,000 and to imprisonment for 5 years and, in the case of a continuing offence, to a further fine of $10,000 for every day during which the offence continues.
104. (1) Where an authorized institution contravenes section 102(1), the institu- tion and the Commissioner shall enter into discussions for the purposes of determin- ing what remedial action is required to be taken by the institution for it to comply with that section, but the Commissioner is not bound by any such discussions.
(2) The Commissioner may, after holding such discussions as he thinks fit under subsection (1), by notice in writing served on the authorized institution, require the institution to take such remedial action as is specified in the notice for the purpose of having the institution comply with section 102(1).
(3) Any authorized institution aggrieved by any requirement contained in a notice under subsection (2) served on it by the Commissioner may appeal, by notice in writing served on the Commissioner and the Financial Secretary stating the grounds of the appeal, to the Financial Secretary against the requirement, but that require- ment shall take effect immediately, notwithstanding that an appeal has been or may be made under this subsection.
(4) The Financial Secretary shall determine an appeal under subsection (3) by confirming, varying or reversing the requirement the subject of the appeal.
(5) Every director and every manager of an authorized institution which contravenes any requirement contained in a notice under subsection (2) commits an offence and is liable on conviction upon indictment to a fine of $500,000 and to imprisonment for 5 years and, in the case of a continuing offence, to a further fine of $10,000 for every day during which the offence continues.
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105. (1) The Commissioner may, by notice in writing served on an authorized institution, vary the capital to risk assets ratio specified in section 102(1) in relation to that institution by increasing the ratio to-
Commissioner may increase capital to risk assets ratio for particular
(a) in the case of an authorized institution which is a bank, not more than 8 per authorized
cent; and
(b) in the case of an authorized institution which is a deposit-taking company,
not more than 10 per cent,
and, where the ratio is so varied, the other provisions of this Part shall, in relation to that institution, apply as if the ratio specified in section 102 (1) where the ratio as so varied.
(2) The Financial Secretary may, by notice in the Gazette, vary any percentage specified in subsection (1).
(3) An authorized institution aggrieved by a variation of the capital to risk assets ratio contained in a notice under subsection (1) served on it by the Commis- sioner may appeal, by notice in writing served on the Commissioner and the Financial Secretary stating the grounds of the appeal, to the Financial Secretary against the variation, but that variation shall take effect immediately, notwithstanding that an appeal has been or may be made under this subsection.
(4) The Financial Secretary shall determine an appeal under subsection (3) by confirming, varying or reversing the variation of capital to risk assets ratio the subject of the appeal.
PART XVIII
LIQUIDITY RATIO OF AUTHORIZED INSTITUTIONS AND MATTERS AFFECTING LIQUIDITY RATIO
institutions.
106. (1) Subject to this Part and Part X, every authorized institution shall Liquidity ratio. maintain a liquidity ratio of not less than 25 per cent in each calendar month as calculated in accordance with the provisions of the Fourth Schedule and this Part.
(2) The liquidity ratio of an authorized institution shall be calculated for each calendar month on the basis of the average of the daily liquidity ratio for the calendar month concerned.
(3) For the purposes of calculating the liquidity ratio of an authorized institution-
(a) in the case of an authorized institution operating in Hong Kong and also elsewhere, the principal place of business in Hong Kong and local branches of the institution shall be deemed collectively to be a separate institution carrying on business in Hong Kong; and
Fourth Schedule.
(b) all the qualifying liabilities within the meaning of the Fourth Schedule of an Fourth Schedule.
authorized institution owed through the principal place of business in Hong Kong or any local branch of the institution operating in Hong Kong and also elsewhere shall be regarded as if they constituted liabilities of that separate institution, and all the liquefiable assets within the meaning of the Fourth Schedule held by or to the credit of the principal place of business in Hong Kong or any local branch shall be regarded as if they were assets of that separate institution.
(4) The Financial Secretary may, by notice in the Gazette, vary the percentage specified in subsection (1).
107. (1) Where an authorized institution contravenes section 106(1), it shall Failure to keep to forthwith notify the Commissioner of that contravention and provide him with such liquidity ratio. particulars of that contravention as he may require.
(2) Where the Commissioner is notified under subsection (1) of a contravention of section 106(1), he shall forthwith notify the Financial Secretary of that contraven- tion and provide him with such particulars of that contravention as he may require.
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