TNAG-1773-FCO40-2525-Hong-Kong-Exchange-Fund-Hong-Kong-Futures-Exchange-Limited--1988 — Page 125

15.

CONFIDENTIAL

BANK RESCUE OPERATIONS

- 43

Expenses on bank rescue operations include arbitration costs of

$11,000 of The Wing On Bank Limited, and operating costs of

$128,403,000 and net interest payments of $61,562,000 in

connection with the guarantee for The Ka Wah Bank Limited.

16.

INTEREST PAYMENTS

Interest on Exchange Fund debt certificates amounted to

$1,183.2 million, compared with $878.6 million in 1986.

Average debt certificates outstanding in 1987 were $7.7 billion

higher than in 1986.

17.

MONEY MARKET OPERATIONS

Income

Less: expenses

18.

INTEREST INCOME

1987

1986

HK$ '000s

HK$'000s

2,202

233

1,223

(233)

979

===

Although interest rates were generally lower in 1987, interest income increased by 19.8% compared with 1986. This is partly due to an increase in the Fund's interest bearing assets and

partly to the use of higher base exchange rates. Interest income also includes $97,405,000 from the standby facilities

provided by the Government to The Ka Wah Bank Limited, $10,190,000 from the temporary line of credit provided by the Government to First Pacific Bank Limited and $10,795,000 from

the loan to The Hong Kong Futures Guarantee Corporation Limited.

CONFIDENTIAL