TNAG-1649-FCO40-2296-Hong-Kong-Commissioner-of-Banking-s-annual-report-for-1986--1987 — Page 47

6.

The review in itself could not, of course,

influence the immediate course of events caused by the major faults already obvious

already obvious in some parts of

the financial system. Close examination of banks

and deposit-taking companies in 1985 revealed a number to be facing serious difficulties. In June,

1985, in the course of a most detailed examination,

the Overseas Trust Bank declared itself to be

insolvent leading to the Government taking over the

bank and its subsidiary, the Hongkong Industrial and

Commercial Bank. This failure amplified the diffi-

culties of other local banks so that by the end of

1985, the Commissioner of Banking had a number of

local banks and deposit-taking companies under his

intensive care, with some 37 deposit-taking

companies having their registrations revoked during

the year. (Two other registered deposit-taking companies were upgraded to licensed status).

7.

In the meantime during 1985, preparation

of the new banking legislation had been generally

completed with the utmost co-operation being

received from banks, deposit-taking companies,

auditors and legal advisers. The year under review,

1986, thus became a year when the main tasks of the

Commissioner were to maintain stability against a

somewhat disordered background, to carry through the

new banking legislation and to prepare for the

changes necessary under the new approach and legislation regarding prudential supervision.

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