TNAG-1487-FCO40-2044-Hong-Kong-banking-Banking-Bill-1986-1986 — Page 211

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DRAFT SPEECH BY HON THOMAS CLYDESDALE

LEGISLATIVE COUNCIL

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28.5.86

Banking Bill 1986

I welcome the introduction of this Bill which should

enhance the regulation of the business of banking in Hong Kong and should assist the Commissioner of Banking to identify potential problems earlier than hitherto. In particular the provision which formalises the relationship between authorised institutions, supervisors and auditors and enables meetings between these three parties to take place without ethical constraints is most helpful. Such meetings should enable the three parties to jointly work out, on a timely basis, solutions to problem matters revealed by audit or examination thus helping to safeguard the interests of depositors and

shareholders.

The Bill does not address the particular problem of the use of nominee companies to conceal the concentration of loans to one person or company. Since however, authorised institutions should be aware of the identity of the ultimate

beneficial borrower of funds and the uses to which the funds are to be put, I would recommend that the Commissioner give consideration to introducing a requirement for this information

to be recorded by the authorized institution in a register to

be available for inspection by both the auditors of the

institution and the Commissioner.

The Bill introduces a number of different percentage tests, particularly those relating to the amended liquidity and new capital adequacy ratios, which have not been tried in practice. Although the capital adequacy test will not be

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