ENG-2004 — Page 108

78 | Financial and Monetary Affairs

The society, established in 1910, provides trading of both tael bars and kilo bars in Hong Kong dollars5. Prices closely follow those in the other major gold markets in London, Zurich and New York. Loco-London gold quotation is made in US dollars per troy ounce of gold.

Hong Kong continues to be one of the most open insurance centres in the world. Among the 180 authorised insurers at year-end, 89 were insurers from 21 overseas countries or the Mainland. Twelve of the world's top 20 insurers are authorised to carry out insurance business in Hong Kong either directly or through a group company. There are 22 professional reinsurers, including most of the top reinsurers in the world. Gross premium income in 2003 was $102 billion, approximately 8.3 per cent of Hong Kong's Gross Domestic Product (GDP).

Financial Services in Hong Kong

Banking Sector

Main Features

Hong Kong maintains a three-tier system of deposit-taking institutions, namely, licensed banks, restricted licence banks and deposit-taking companies. They are collectively known as authorised institutions (Als) under the Banking Ordinance. The Hong Kong Monetary Authority (HKMA) is the licensing authority for all three types of Als.

Only licensed banks may conduct full banking services, including in particular the provision of current and savings accounts and acceptance of deposits of any size and maturity. Restricted licence banks may take deposits of any maturity of $500,000 or above. Deposit-taking companies may take deposits of $100,000 or above with an original maturity of at least three months. Many deposit-taking companies are owned by, or otherwise associated with, licensed banks.

Hong Kong has one of the highest concentrations of banking institutions in the world. As at December 2004, there were 133 licensed banks, 40 restricted licence banks and 35 deposit-taking companies, which included operations of banks from 31 countries around the world. These 208 Als maintained an extensive network of 1 285 local branches. In addition, there were 85 representative offices of overseas banks in Hong Kong. A local representative office is not allowed to engage in any banking business. Its role is confined to liaison work between the bank and its customers in Hong Kong.

The total deposit liabilities of all Als to customers and the total loans and advances extended by these institutions at year-end were $3,866 billion and $2,156 billion, respectively. The total assets of all Als amounted to $7,137 billion.

Hong Kong has a robust interbank payment system, which operates through the Real Time Gross Settlement (RTGS) system. The Hong Kong dollar RTGS system has a single-tier settlement structure, with all banks maintaining settlement accounts with

5

Tael bars are of 99 per cent fineness and weighted in taels (one tael equals approximately 1.20337 troy ounces). Kilo bars are of 999.9 parts per thousand fineness and weighted in kilograms.