ENG-2009 — Page 128

80 | Financial and Monetary Affairs

Shanghai-Hong Kong Financial Co-operation

China's State Council announced in March 2009 that, Shanghai will become an international financial centre by 2020 in line with China's economic strength and the international status of its currency, the RMB. The announcement also calls for a strengthening of co-operation between Shanghai and Hong Kong in the development of Shanghai's financial centre.

It is to China's advantage to have two financial systems working side by side. Hong Kong will work with Shanghai to strengthen the development of both cities' securities and bond markets, encourage mutual establishment of financial institutions, and train and exchange financial talents.

Guangdong-Hong Kong Financial Co-operation

Guangdong is the Mainland province closest to Hong Kong in geographical, cultural and economic terms. Guangdong and Hong Kong are continually looking into ways of strengthening further financial co-operation with each other. The Central People's Government has endorsed the approach of leveraging the pilot measures stipulated in 'The Outline of the Plan for the Reform and Development of the Pearl River Delta', which is designed to further enhance co-operation between the Pearl River Delta region and Hong Kong and Macao.

An expert group was set up in August under the Hong Kong-Guangdong Co-operation Joint Conference to discuss closer co-operation between the two places in conducting their securities, banking, RMB and insurance businesses.

Banking Sector

Main Features

Hong Kong maintains three tiers of deposit-taking institutions, comprising licensed banks, restricted licence banks and deposit-taking companies. They are known collectively as Authorised Institutions (Als) under the Banking Ordinance. The HKMA is the licensing authority for 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.

Hong Kong has one of the highest concentrations of banking institutions in the world. At the end of 2009, there were 145 licensed banks, 26 restricted licence banks and 28 deposit-taking companies. These 199 Als maintained a network of more than 1 300 local branches. There were also 71 representative offices of overseas banks in Hong Kong at year's end.

The total deposit liabilities of all Als to customers and the total loans and advances extended by these institutions at the end of 2009 were $6,381 billion and $3,289 billion respectively. The total assets of all Als amounted to $10,661 billion.