TNAG-1649-FCO40-2296-Hong-Kong-Commissioner-of-Banking-s-annual-report-for-1986--1987 — Page 46

4.

In 1981, the deposit-taking companies were divided into registered and licensed categories with

the latter having a larger capital and with different deposit-taking limitations. The so-called

"three-tier system" was thus introduced i.e. licensed banks, licensed deposit-taking companies

and registered deposit-taking companies.

5.

Events in the financial sector following the collapse of the stock and property markets in 1982 and 1983 caused the Government to examine its previous stance on and the general requirements of prudential supervision of banks and other deposit- taking companies.

These events included the

revocation of the registration of 8 well known

deposit-taking companies, runs on two banks, the taking over by the Government of the Hang Lung Bank

(September, 1983) and

1983) and the difficulties of Bumiputra

Malaysia Finance Ltd.

The major review of

by

prudential supervision began with a report consultants drawn from the Banking Supervision Department of the Bank of England. Their report,

made in 1984, was carried forward by close

consultation with all interested parties in Hong Kong beginning in February, 1985. Impetus was given to the review by the collapse of an exchange dealer who was found to be operating an illegal deposit-

taking company and of a deposit-taking

Dominican Finance Ltd.

company,

3