TNAG-1487-FCO40-2044-Hong-Kong-banking-Banking-Bill-1986-1986 — Page 27

Enclosure No. 2

HONG KONG

LEGAL REPORT

THE BANKING ORDINANCE 1986

(No. 27 of 1986)

This Ordinance repeals and replaces the Banking Ordinance (Cap. 155) and Deposit-taking Companies Ordinance (Cap. 328). It consolidates and amends the law relating to banking business and the business of taking deposits as respectively contained in those two Ordinances. It will come into operation on a day or days to be fixed.

2. There are two reasons for the consolidation

(a) many of the provisions of the former Deposit-

taking Companies Ordinance merely paralleled those in the former Banking Ordinance. Consequently, whenever amendments were made to provisions in the Banking Ordinance, they required separate amendments to be made to like provisions in the Deposit-taking Companies Ordinance. By combining such provisions in this Ordinance (in particular, by using the expression "authorized institution" to mean either a bank or a deposit-taking company) such duplication is now unnecessary; and

(b) the greater powers of prudential supervision of banks contained in the former Banking Ordinance are not only repeated in this Ordinance (with modifications) but extended to apply to deposit- taking companies (Part X containing the most significant extension of powers in this respect).

This Ordinance thus brings together the complementary provisions of the two repealed Ordinances and provides, as much as is possible, uniform supervisory powers for the two elements that comprise the Hong Kong banking system that is, banks and deposit-taking companies.

3. In amending the law the significant objects of this Ordinance are as follows

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(a) to define more clearly the role of the Commissioner of Banking (section 7), to provide the Commissioner with wider powers of control and greater flexibility in the way he can exercise them (in particular, Part X and sections 70, 71, 72, 73, 82 and 95), and, as a counterbalance to the Commissioner's increased powers, to provide for appeals to the Financial Secretary or the Governor in Council and to require the Commissioner to make an annual report (section 9);