TNAG-1649-FCO40-2296-Hong-Kong-Commissioner-of-Banking-s-annual-report-for-1986--1987 — Page 104

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02/7.0

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For discussion

on 17 March 1987

XCC(87)46 Copy No

MEMORANDUM FOR EXECUTIVE COUNCIL

THE COMMISSIONER OF BANKING'S ANNUAL REPORT FOR 1986

Presented to Members at Annex to this memorandum is a copy of the Commissioner of Banking's Annual Report for 1986. This memorandum briefly summarizes the Report and seeks Members' advice on its publication.

Background

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Under section 9(1) of the Banking Ordinance, the Commissioner of Banking is required to prepare an annual report on the workings of the Ordinance and on the activities of his office during the preceding year. The report, which may set out any measures that he considers necessary for improving the working of the Ordinance and of the activities of his office, is to be furnished to the Financial Secretary for presentation to the Governor in Council. The Governor in Counicl may publish the report, in whole or in part, or decline to publish it.

Summary of the Annual Report for 1986

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Although the Banking Ordinance only came into effect on 1 September 1986, the Commissioner's Report covers the entire calendar year 1986. Chapter 1 of the Report summarizes the development of prudential supervision since 1964, leading up to the enactment of the Banking Ordinance. In Chapter 2, the Commissioner describes the diverse nature of the banking industry in Hong Kong. Chapter 3 explains the structure and staffing of the Commissioner's Office.

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In Chapter 4, the Commissioner reviews the events of 1986. These included his involvement in the restructuring of several local banks, the further reduction in the size of the registered deposit-taking company sector, an increase in the number of licensed banks, the enactment and coming into operation of the new Banking Ordinance, and the publication of the first set of guidelines under the new Ordinance.

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on

In the last chapter, the Commissioner comments the improved health of the banking sector and discusses the Government's policy in providing assistance to troubled banks. In looking to the future, he stresses the importance

CONFIDENTIAL