TNAG-1487-FCO40-2044-Hong-Kong-banking-Banking-Bill-1986-1986 — Page 115

(Cap. 316,

sub. leg.)

Enactments

Census and Statistics (Annual Survey of Banks, Deposit-taking Companies and Representative Offices of Foreign Banks) Order

(Acquisition) Ordinance

(Cap. 345.)

Hang Lung Bank

(Cap. 345, sub. leg.)

(Cap. 356.)

(Cap. 361.)

(Cap. 364.)

(Cap. 364, sub. leg.)

(9 of 1985.)

(30 of 1985.)

(L.N. 7/86.)

(L.N. 54/86.)

Hang Lung Bank (Compensation of Former Shareholders) Regulations

Monetary Statistics Ordinance

Stock Exchanges Unification Ordinance

The Hong Kong Association of Banks Ordinance

The Hong Kong

Association of Banks By-laws

Money Changers

(Disclosure of Rates, Charges and

Commissions)

Ordinance

Overseas Trust Bank (Acquisition) Ordinance

Securities (Specification of Approved Assets, Liquid Assets and Ranking Liabilities) Notice 1986

Overseas Trust Bank (Compensation of Registered Holders of Shares) Regulations 1986

82

Amendments

Delete from the definition of "deposit-taking company" in paragraph 2 “Deposit-taking Companies Ordinance" and substitute the following

"Banking Ordinance 1986”.

Delete from sections 9(2) and 12 ", the Deposit-taking Companies Ordinance,”.

Delete from paragraph 6(3) of the Schedule "20, 23, 24, 27, 28 and 29 of the Banking Ordinance" and substitute the following-

"77, 81, 83, 87, 89 and 92 of the Banking Ordinance 1986".

Delete from the definition of "deposit-taking company" in section 2 "Deposit-taking Companies Ordinance" and substitute the following-

"Banking Ordinance 1986”.

Delete from section 13(1)(b) “Deposit-taking Companies Ordinance" and substitute the following-

"Banking Ordinance 1986”.

(a) Delete from the definition of "licensed bank" in section 2 "7 or section 42 of the Banking Ordin- ance" and substitute the following-

"16 or section 111 of the Banking Ordinance 1986".

(b) Delete from sections 8(1)(b)(i) and 16(a)(ii) “sec- tion 42 of the Banking Ordinance" and substitute the following-

"section 111 of the Banking Ordinance 1986".

Delete from by-law 2(2) "42 of the Banking Ordinance" and substitute the following-

"111 of the Banking Ordinance 1986".

Delete from section 3(1)(b) “Deposit-taking Companies Ordinance" and substitute the following-

"Banking Ordinance 1986”.

Delete from sections 10(2) and 12", the Deposit-taking Companies Ordinance,"

Delete from the definition of "deposit-taking company" in paragraph 2 "Deposit-taking Companies Ordinance" and substitute the following-

"Banking Ordinance 1986".

Delete from paragraph 6(3) of the Schedule "20, 23, 24, 27, 28 and 29 of the Banking Ordinance" and substitute the following-

"77, 81, 83, 87, 89 and 92 of the Banking Ordinance 1986".

83

Explanatory Memorandum

The purpose of this Bill is to consolidate and amend the law relating to banking business and the business of taking deposits as contained in the Banking Ordinance (Cap. 155) and the Deposit-taking Companies Ordinance (Cap. 328). The main features of the Bill are described below. It will come into operation on a date to be fixed, but there is a power at clause 1(2) to appoint different dates for different provisions.

2.

The attached Comparative Table traces the origins of the provisions of the Bill by reference to the provisions of the Banking Ordinance and the Deposit-taking Companies Ordinance.

3. Clause 2(1) defines the terms used in the Bill. The term "authorized institution" means a bank or deposit-taking company which is licensed or registered under the Bill. The definition of "controller" is relevant, in particular, to clauses 64(1)(e), 72 and 81(1)(d). It sets out the criteria by which a person is considered to be in effective control of a company. The definition of "deposit" has been extended to cover loans of money at no interest or at negative interest.

4. Part II of the Bill reproduces (with modifications) the existing provisions relating to the establishment of a Banking Advisory Committee and a Deposit-taking Companies Advisory Committee, the appointment of a Commissioner of Banking and the Governor's power to give directions to the Financial Secretary and the Commissioner. Clauses 7 and 9 are new. Clause 7 sets out the functions of the Commissioner and reflects a different emphasis in the approach to prudential supervision one that relies more on the Commissioner's discretion and qualitative judgment than previously. Safeguards against the exercise of any such discretion by the Commissioner are provided throughout the Bill by way of appeals to the Financial Secretary or the Governor in Council. Also counterbalancing the Commis- sioner's expanded role are the reporting requirements at clause 9. The Commissioner is required to provide an annual report to the Governor in Council on the working of the Bill and the activities of his office during the year. The Governor in Council may publish the report. Apart from the annual report, the Governor has the power to request a report from the Commissioner at any time.

5. Part III reproduces (with modifications) the existing provisions restricting banking business and the business of taking deposits to licensed banks and registered or licensed deposit-taking companies.

6. Part IV reproduces the licensing and registration procedures for banks and deposit-taking companies. Clause 27 provides that the Commissioner is to keep a register, open to the public, containing particulars of all licensed banks, local representative offices and registered and licensed deposit-taking companies. Clause 28 provides that the Commissioner is to publish a notice in the Gazette of the name of each licensed bank, local representative office, registered or licensed deposit-taking company entered in or removed from the register. Where the registration or licence of a deposit-taking company is suspended under the Bill, the Commissioner is required to make a notation in the register against the name of the deposit-taking company concerned that its registration or licence has been suspended and give particulars of the period of suspension.

7.

Parts V and VI reproduce (with modifications) the existing provisions relating to the revocation of a bank's or deposit-taking company's licence or registration and the suspension of a deposit-taking company's licence or registration. 8. Part VII on transfer of a licence or registration is new. It is intended to deal with cases like that of Lloyds Bank International Ltd., whose business was recently granted to a new entity consequent upon a merging of businesses within companies of the same group. At present, such cases can only be dealt with through the more lengthy procedure of granting a licence or registration to the new entity and subsequently revoking the old licence or registration. The procedures in applying for such transfers parallel those in applying for a new licence or registration.

9.

Parts VIII and IX reproduce the existing provisions relating to the establish- ment of local branches, local representative offices, overseas branches and overseas representative offices of banks and deposit-taking companies.