A188
Ord. No. 27/86
BANKING
BANKING
Ord. No. 27/86
A189
(a) is given by a bank which-
(i) is a shareholder in the deposit-taking company;
(ii) controls any body corporate which is a shareholder in the deposit- taking company; or
(iii) is a bank controlled by a body corporate which is either a share- holder in the deposit-taking company or controls any body corporate which is a shareholder in the deposit-taking company; or
(b) is given by a bank incorporated in Hong Kong, or by a bank incorporated outside Hong Kong which is not licenced under this Ordinance but is, in the opinion of the Commissioner, adequately supervised by a banking super- visory authority in its place of incorporation; and
(c) has been given pursuant to a resolution of the board of directors of the bank and with the knowledge of the banking supervisory authority of the place where the bank is incorporated.
(5) In accepting any letter of comfort under subsection (3) or (4) the Com- missioner-
(a) shall limit the aggregate amount of any advances and investments which the authorized institution concerned may make, grant or incur to such aggregate amount as he may in his discretion specify, (but subject, however, to any direction given him by the Financial Secretary under subsection (6) ) and, without limiting the generality of such discretion, such amount may be determined--
(i) in relation to the paid-up capital and reserves of the bank giving the letter of comfort as determined by reference to any accounts furnished to the Commissioner by the bank either at the time when the letter of comfort is submitted to the Commissioner for his determination, or subsequently;
(ii) having regard to-
(A) the extent of the beneficial shareholding of the bank giving the letter of comfort in the authorized institution for the benefit of which it is given where subsection (3)(a)(i) or (4)(a)(i), as the case may be, applies;
(B) the extent of any beneficial shareholding relevant in determining control for the purposes of subsection (3)(a)(ii) or (iii) or (4)(a)(ii) or (iii), as the case may be;
(C) the paid-up capital and reserves of the authorized institution for
the benefit of which the letter of comfort is given;
(D) the laws and practices applicable to the transactions of the bank
giving the letter of comfort;
(b) may require the bank giving the letter of comfort to submit, at such intervals as the Commissioner may determine, such accounts as he may specify,
and in notifying such acceptance to the authorized institution for the benefit of which the letter of comfort is given he shall also notify it of the limit imposed under paragraph (a) and any requirement under paragraph (b).
(6) The Financial Secretary may at any time direct the Commissioner either generally or in any particular case as to the limits to be imposed in the exercise of his functions under subsection (5)(a) and it shall be the duty of the Commissioner to comply with any such direction.
(7) The Commissioner may at any time, by notice to an authorized institution, the liabilities of which are assured by a letter of comfort accepted by the Commis- sioner under subsection (3) or (4), as the case may be-
(a) where any limit has been specified for the purposes of subsection (5)(a) or any requirement imposed under subsection (5)(b), specify a new limit or vary such a requirement; but he shall not impose a more restrictive limit unless he is of the opinion that-
(i) the institution has failed to comply with such limit or requirement; or (ii) it is in the interests of depositors so to do; or
(b) where any such limit has not been so specified or such a requirement
imposed, specify such limit or impose such requirement,
and the provisions of subsection (3) or (4), as the case may be, shall apply in relation to the exercise of the powers of the Commissioner under this subsection as they do in relation to the exercise of his powers under subsection (3) or (4), as the case may be.
(8) Notwithstanding subsection (1), where the aggregate amount of any ad- vances and investments immediately prior-
(a) to the specification of any new limit under subsection (7) did not exceed the
amount previously specified;
(b) to the imposition of a limit under subsection (5) or (7) did not exceed the
aggregate amount then permissible under this section; or
(c) to the withdrawal by the bank giving a letter of comfort accepted by the Commissioner under subsection (3) or (4), as the case may be, did not exceed the aggregate amount permissible by this section,
and immediately after such specification or withdrawal did exceed the amount permissible under this section, the authorized institution may---
(i) permit any advances included in computing such aggregate to be out- standing until the maturity thereof, or until they may lawfully be terminated without penalty to the institution, as the case may be; and
(ii) retain any investments included in computing such aggregate, for a period
of not more than 3 months, or such longer period as may be approved by the Commissioner in writing in any particular case, from the date of the specification of the new limit, the imposition of the limit or, as the case may be, the withdrawal of the bank referred to in paragraph (c):
Provided that, in either case, no new advances or investments which are to be included in computing such aggregate are granted, incurred or made while the amount permissible under this section is so exceeded.
(9) No letter of comfort accepted by the Commissioner under subsection (3) or (4) in accordance with his powers under this section shall authorize any advances or investments which exceed in aggregate any limitations on such aggregate amount assured in the letter of comfort.
(10) For the purposes of this section-
(a) the expression "person" includes any partnership, any public body and any
body of persons, corporate or unincorporate;
(b) the expression "advances" shall include-
(i) any kind of advance, loan, (whether by way of deposit or otherwise) or credit facility, including an irrevocable letter of credit to the extent to which it is not covered by a marginal cash deposit, given by an authorized institution; and
(ii) any financial guarantee given, or liability incurred, by an authorized institution;
(c) the expression "investments" shall mean any such holding by an authorized
institution as is referred to in subsection (2)(b);
(d) advances, loans, facilities, guarantees or liabilities shall be deemed to be granted to and to be outstanding in relation to any person liable or contingently liable thereon whether as principal debtor, guarantor, or otherwise:
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