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(CHAPTER 155)CONTENTS
(CHAPTER 155)CONTENTS
99. Failure to keep to capital adequacy ratio
(1) Where an authorized institution contravenes section 98 (1), it shall
forthwith notify the Monetary Authority of that contravention and provide
him with such particulars of that contravention as he may require.
(Amended 82 of 1992 s. 25)
(2) Where the Monetary Authority is notified under subsection (1) of a
contravention of section 98 (1), he shall forthwith notify the Financial
Secretary of that contravention and provide him with such particulars of
that contravention as he may require. (Amended 82 of 1992 s. 25)
(3) Every director and every manager of an authorized institution which
contravenes subsection (1) commits an offence and is liable on conviction
upon indictment to a fine of $ 500,000 and to imprisonment for 5 years
and, in the case of a continuing offence, to a further fine of $ 10,000
for every day during which the offence continues.
100. Remedial action
(1) Where an authorized institution contravenes section 98 (1), the
institution and the Monetary Authority shall enter into discussions for
the purposes of determining what remedial action is required to be taken
by the institution for it to comply with that section, but the Monetary
Authority shall not be bound by any such discussions.
(2) The Monetary Authority may, after holding such discussions as he
thinks fit under subsection (1), by notice in writing served on the
authorized institution, require the institution to take such remedial
action as is specified in the notice for the purpose of having the
institution comply with section 98 (1).
(3) Any authorized institution aggrieved by any requirement contained in
a notice under subsection (2) served on it by the Monetary Authority may
appeal to the Governor in Council against the requirement, but that
requirement shall take effect immediately, notwithstanding that an appeal
has been or may be made under this subsection. (Amended 3 of 1990 s. 41)
(4) (Repealed 3 of 1990 s. 41)
(5) Every director and every manager of an authorized institution which
contravenes any requirement contained in a notice under subsection (2)
commits an offence and is liable on conviction upon indictment to a fine
of $ 500,000 and to imprisonment for 5 years and, in the case of a
continuing offence, to a further fine of $ 10,000 for every day during
which the offence continues.
(Amended 82 of 1992 s. 25)
101. Monetary Authority may increase capital adequacy ratio for
particular authorized institutions
(1) The Monetary Authority may, after consultation with an authorized
institution, by notice in writing served on it vary the capital adequacy
ratio specified in section 98 (1) in relation to that institution by
increasing the ratio to- (Amended 82 of 1992 s. 25)
(a) in the case of an authorized institution which is a bank, not more
than 12 per cent; and
(b) in the case of an authorized institution which is a deposit-taking
company or a restricted licence bank, not more than 16 per cent, and,
where the ratio is so varied, the other provisions of this Part shall, in
relation to that institution, apply as if the ratio specified in section
98 (1) were the ratio as so varied. (Varied L.N. 413 of 1989) (Amended 64
of 1987 s. 25; 3 of 1990 s. 42)
(2) The Financial Secretary may, by notice in the Gazette, vary any
percentage specified in subsection (1).
(3) An authorized institution aggrieved by a variation of the capital
adequacy ratio contained in a notice under subsection (1) served on it by
the Monetary Authority may appeal, by notice in writing served on the
Monetary Authority and the Financial Secretary stating the grounds of the
appeal, to the Financial Secretary against the variation, but that
variation shall take effect immediately, notwithstanding that an appeal
has been or may be made under this subsection. (Amended 82 of 1992 s. 25)
(4) The Financial Secretary shall determine an appeal under subsection
(3) by confirming, varying or reversing the variation of capital adequacy
ratio the subject of the appeal.
PART XVIII LIQUIDITY RATIO OF AUTHORIZED INSTITUTIONS AND MATTERS AFFECTING LIQUIDITY RATIO
102. Liquidity ratio
(1) Subject to this Part and Part X, every authorized institution shall
maintain a liquidity ratio of not less than 25 per cent in each calendar
month as calculated in accordance with the provisions of the Fourth
Schedule and this Part.
(2) The liquidity ratio of an authorized institution shall be calculated
for each calendar month on the basis of the sum of its liquefiable assets
and the sum of its qualifying liabilities, within the meaning of the
Fourth Schedule, for each working day of the calendar month concerned
except that the Monetary Authority may, as he thinks fit, by notice in
writing served on an authorized institution, permit the institution to
calculate its liquidity ratio by reference to such days during the
calendar month concerned as the Monetary Authority may specify in the
notice:
(Amended 82 of 1992 s. 25)
Provided that if any such specified day is a public holiday the
immediately preceding working day shall be taken for the purposes of such
calculation.
(3) In relation to an authorized institution that operates in Hong Kong
and also elsewhere, this Part shall apply only to its principal place of
business in Hong Kong and its local branches and shall do so as if that
principal place of business and those branches were collectively a
separate authorized institution.
(4) The Financial Secretary may, by notice in the Gazette, vary the
percentage specified in subsection (1).
103. Failure to keep to liquidity ratio
(1) Where an authorized institution contravenes section 102 (1), it
shall forthwith notify the Monetary Authority of that contravention and
provide him with such particulars of that contravention as he may require.
(Amended 82 of 1992 s. 25)
(2) Where the Monetary Authority is notified under subsection (1) of a
contravention of section 102 (1), he shall forthwith notify the Financial
Secretary of that contravention and provide him with such particulars of
that contravention as he may require. (Amended 82 of 1992 s. 25)
(3) Every director and every manager of an authorized institution which
contravenes subsection (1) commits an offence and is liable on conviction
upon indictment to a fine of $ 500,000 and to imprisonment for 5 years
and, in the case of a continuing offence, to a further fine of $ 10,000
for every day during which the offence continues.
104. Remedial action
(1) Where an authorized institution contravenes section 102 (1), the
institution and the Monetary Authority shall enter into discussions for
the purposes of determining what remedial action is required to be taken
by the institution for it to comply with that section, but the Monetary
Authority shall not be bound by any such discussions.
(2) The Monetary Authority may, after holding such discussions as he
thinks fit under subsection (1), by notice in writing served on the
authorized institution, require the institution to take such remedial
action as is specified in the notice for the purpose of having the
institution comply with section 102 (1).
(3) Any authorized institution aggrieved by any requirement contained in
a notice under subsection (2) served on it by the Monetary Authority may
appeal to the Governor in Council against the requirement, but that
requirement shall take effect immediately, notwithstanding that an appeal
has been or may be made under this subsection. (Amended 3 of 1990 s. 43)
(4) (Repealed 3 of 1990 s. 43)
(5) Every director and every manager of an authorized institution which
contravenes any requirement contained in a notice under subsection (2)
commits an offence and is liable on conviction upon indictment to a fine
of $ 500,000 and to imprisonment for 5 years and, in the case of a
continuing offence, to a further fine of $ 10,000 for every day during
which the offence continues.
(Amended 82 of 1992 s. 25)
105. Monetary Authority may vary liquidity ratio for particular
authorized institutions
(1) The Monetary Authority may, by notice in writing served on an
authorized institution, vary the liquidity ratio specified in section 102
(1) in relation to that institution by increasing or decreasing the ratio
and, where the ratio is so varied, sections 102, 103 and 104 shall, in
relation to that institution, apply as if the ratio specified in section
102 (1) were the ratio as so varied.
(2) Where the Monetary Authority varies under subsection (1) the
liquidity ratio of any authorized institution, he shall forthwith provide
the Financial Secretary with particulars of the variation.
(3) An authorized institution aggrieved by a variation of the liquidity
ratio contained in a notice under subsection (1) served on it by the
Monetary Authority may appeal, by notice in writing served on the Monetary
Authority and the Financial Secretary stating the grounds of the appeal,
to the Financial Secretary against the variation, but that variation shall
take effect immediately, notwithstanding that an appeal has been or may be
made under this subsection.
(4) The Financial Secretary shall determine an appeal under subsection
(3) by confirming, varying or reversing the variation of liquidity ratio
the subject of the appeal.
(Amended 82 of 1992 s. 25)
106. Authorized institutions not to create certain charges and to notify
Monetary Authority of certain civil proceedings
(1) Subject to subsection (2), an authorized institution incorporated in
Hong Kong shall not, except with the approval of the Monetary Authority,
which approval shall be subject to such conditions as he may think proper
to attach thereto, by whatever means cause the sum total of all amounts
secured by way of charge over its assets (excluding contra items) to
exceed 5 per cent of the sum total of the value of those assets. (Amended
82 of 1992 s. 25)
(2) Where, immediately upon the commencement of this Ordinance, the sum
total of all amounts secured by way of charge over the assets (excluding
contra items) of an authorized institution incorporated in Hong Kong
exceeds 5 per cent of the sum total of the value of those assets, the
institution shall be deemed to have an approval under subsection (1)
until-
(a) the expiration of 3 months after that commencement, or such further
period as the Monetary Authority may allow in any particular case; or
(Amended 82 of 1992 s. 25)
(b) it receives an approval under subsection (1),
whichever first occurs.
(3) Where any civil proceedings have been instituted against any
authorized institution incorporated in Hong Kong, irrespective of whether
the proceedings have been instituted before, on or after the commencement
of this Ordinance, the institution shall, if those proceedings, materially
affect, or could materially affect, the financial position of the
institution, forthwith notify the Monetary Authority of those proceedings
and provide the Monetary Authority with such particulars of those
proceedings as he may require. (Amended 82 of 1992 s. 25)
(4) Every director and every manager of an authorized institution which
contravenes subsection (1) or (3) commits an offence and is liable-
(a) on conviction upon indictment to a fine of $200,000 and to
imprisonment for 2 years and, in the case of a continuing offence, to a
further fine of $10,000 for every day during which the offence continues;
and
(b) on summary conviction to a fine of $50,000 and to imprisonment for 6
months and, in the case of a continuing offence, to a further fine of
$5,000 for every day during which the offence continues.
(5) For the purposes of subsections (1) and (2)-
"assets" includes assets outside Hong Kong;
"charge" includes lien, encumbrance, equitable interest and third party
right;
"value" shall have the same meaning assigned to it in section 79
(1).
PART XIX 107-116. (Repealed 43 of 1990 s. 8)
PART XX INVESTIGATIONS OF AUTHORIZED INSTITUTIONS
117. Investigations on behalf of the Financial Secretary
(1) If it appears to the Monetary Authority that it is in the interests
of depositors of an authorized institution or a former authorized
institution or in the public interest that an inquiry should be made into
the affairs of that institution he may make a report to that effect to the
Financial Secretary. (Amended 82 of 1992 s. 25)
(2) The Financial Secretary, on receipt of a report under subsection
(1), may appoint a competent person to investigate and report-
(a) to him; and
(b) in the case of an authorized institution which is or has been a
deposit-taking company, to the Monetary Authority, (Amended 3 of 1990 s.
44; 82 of 1992 s. 25) on the state and conduct of the business of the
authorized institution concerned, or any particular aspect of that
business specified by him.
(3) The Financial Secretary may, from time to time after making an
appointment under subsection (2), and before the person so appointed
reports to him, require that person to inquire into any further aspect of
the authorized institution concerned.
(4) The person appointed under subsection (2) shall be paid such
remuneration and allowances and be appointed on such terms as the
Financial Secretary shall from time to time determine.
(5) On receipt of the report of the person appointed under subsection
(2) the Financial Secretary may, without limiting the generality of the
exercise by him of any other powers which he may exercise under this
Ordinance-
(a) if he is of the opinion that it is in the public interest to do so,
cause the whole or any part of a report under this section to be published
in such manner as he thinks fit:
Provided that nothing in a report published under this paragraph shall
enable any particular customer of an authorized institution to be
identified or reveal details of the affairs of any such customer without
the consent of that customer;
(b) require the person appointed under subsection (2) to report further
on any matters arising from the report;
(c) refer the report to the Governor in Council with the recommendation
that the Governor in Council should exercise one or more of his powers
under, in the case of an authorized institution which is a bank, sections
29 and 53 or, in the case of an authorized institution which is a deposit-
taking company or a restricted licence bank, section 53;
(d) if it appears that an offence may have been committed by any person,
refer the report to the Attorney General;
(e) in the case of an authorized institution which is a deposit-taking
company, refer the report to the Monetary Authority with the
recommendation that the Monetary Authority should exercise one or more of
his powers under section 31 and Part VI; (Amended 82 of 1992 s. 25)
(f) apply to the High Court for a winding-up order under section 122
(5). (Amended 3 of 1990 s. 44)
(6) The Financial Secretary shall not exercise his powers under
subsection (2) in the case of a former authorized institution which ceased
to be an authorized institution 12 months or more before the date of the
report under subsection (1).
(7) Any person who-
(a) with intent to defeat the purposes of this section or to delay or
obstruct the carrying out of an investigation under this section-
(i) conceals, destroys, mutilates or alters a document relating to a
matter which is the subject of an investigation by a person appointed
under subsection (2); or
(ii) sends, or causes to be sent, or conspires with another person to
send, out of Hong Kong any such document; or
(b) knowingly furnishes to a person appointed under subsection (2) any
information which is false or misleading in a material particular,
commits an offence and is liable on conviction upon indictment or on
summary conviction to a fine of $20,000 and to imprisonment for 2 years.
(8) For the avoidance of doubt, it is hereby declared that the reference
in subsection (6) to "former authorized institution" shall include any
person which was a deposit-taking company within the meaning of this
Ordinance as in force at any time before the [1] commencement of the
Banking (Amendment) Ordinance 1990 (3 of 1990). (Added 3 of 1990 s. 44)
118. Powers of the inspector and offences in connection with the
investigation
(1) Subject to this section, the inspector may determine the manner in
which an inquiry under section 117 is to proceed.
(2) If the inspector thinks it necessary for the purposes of his
investigation, he may also investigate the business of any company which
is or has at any relevant time been-
(a) a holding company or subsidiary of the body whose business is under
investigation;
(b) a subsidiary of a holding company of that body; or
(c) a holding company of a subsidiary of that body.
(3) It shall be the duty of every director, manager, employee, or agent
of a company whose business is under investigation (whether by virtue of
section 117 (2) or subsection (2) and any person who has in his possession
books, papers or information relevant to the investigation-
(a) to produce to the inspector all books and papers relating to the
company concerned which are in his custody or power;
(b) to attend before the inspector when required to do so; and
(c) to answer truthfully and to the best of his ability any questions
which may be put to him by the inspector and which are relevant to the
investigation: Provided that an inspector shall not require the disclosure
by a solicitor or counsel of any privileged communication, whether oral or
written, made to or by him in that capacity.
(4) Anything said by any person in answer to a question put by the
inspector under subsection (3) (c) shall be inadmissible in any criminal
proceedings other than criminal proceedings brought under this section.
(5) Any director, manager, employee or agent of a company and any other
person who-
(a) without reasonable excuse fails to produce any books or papers which
it is his duty to produce under subsection (3); or
(b) without reasonable excuse fails to attend before the inspector when
required to do so under this section; or
(c) fails to answer to the best of his ability any question which is put
to him by an inspector with respect to a business which is under
investigation under section 117 or to the business of any body corporate
which is being investigated by virtue of subsection (2),
commits an offence and is liable on conviction upon indictment or on
summary conviction to a fine of $20,000 and to imprisonment for 6 months.
(6) In this section-
(a) "inspector" means a person appointed under section 117 (2);
(b) any reference to a director, manager, employee or agent of a company
includes a reference to a person who has been but no longer is a director,
manager, employee or agent of that company;
(c) "agent" in relation to a company whose business is under
investigation includes its bankers and solicitors and any persons, whether
officers of the body or not, who are employed as its auditors.
PART XXI MISCELLANEOUS
119. Governor in Council to decide whether or not banking business or
business of taking deposits is being conducted
(1) In the event of any dispute as to whether a person is carrying on a
banking business or a business of taking deposits, the matter, except in
the case of a prosecution for any offence against this Ordinance, shall be
submitted to the Governor in Council for his determination; and the
decision of the Governor in Council shall be final and conclusive for all
purposes of this Ordinance.
(2) A submission under subsection (1) may be made by the Financial
Secretary or by any bank, deposit-taking company or restricted licence
bank or person which or who is interested in the determination of the
matter. (Amended 3 of 1990 s. 45)
120. Official secrecy
(1) Except as may be necessary for the exercise of any function under
this Ordinance or for carrying into effect the provisions of this
Ordinance, every person to whom this subsection applies- (Amended 64 of
1987 s. 26)
(a) shall preserve and aid in preserving secrecy with regard to all
matters relating to the affairs of any person that may come to his
knowledge in the exercise of any function under this Ordinance;
(b) shall not communicate any such matter to any person other than the
person to whom such matter relates; and
(c) shall not suffer or permit any person to have access to any records
in the possession, custody or control of any person to whom this
subsection applies;
(2) Subsection (1) shall apply to any person who is or has been-
(a) a public officer;
(b) a person authorized by the Monetary Authority;
(c) a person appointed under section 52 (1) (B), or by order of the
Governor in Council under section 53 (1) (ii), to advise an authorized
institution in the proper conduct of its business;
(d) a person who has assumed control of the business of an authorized
institution pursuant to a direction under section 52 (1) (C) or an order
of the Governor in Council under section 53 (1) (ii);
(e) a person appointed under section 117 (2); and
(f) a person employed by or assisting a person to whom this subsection
applies by virtue of paragraph (b), (c), (d), or (e), who exercises or has
exercised any function under this Ordinance.
(3) Where under section 52 (1) (C) or under section 53 (1) (ii) the
Monetary Authority assumes control of and carries on the business of an
authorized institution or any other person is directed so to do,
subsection (1) shall not apply if the Monetary Authority or such other
person is required to comply with a notice to furnish returns and
information under section 51 of the Inland Revenue Ordinance (Cap. 112).
(4) No person who exercises any function in the course of an examination
or investigation under section 47, 50, 55, or 117 or who receives reports,
returns or information submitted under section 47, 50, 55, 56, 59, 63 or
64 shall be required to produce in any court any book, account or other
document whatsoever or to divulge or communicate to any court any matter
or thing coming under his notice in the exercise of his functions under
this Ordinance, except as may be necessary in the course of a prosecution
for any offence or of a winding-up by the High Court under section 122.
(Amended 67 of 1992 s. 9)
(5) Subsection (1) shall not apply-
(a) to the disclosure of information in the form of a summary of similar
information provided by a number of authorized institutions if the summary
is so framed as to prevent particulars relating to the business of any
particular authorized relating to the business of any particular
authorized institution being ascertained from it;
(b) to the disclosure of information with a view to the institution of,
or otherwise for the purposes of, any criminal proceedings, whether under
this Ordinance or otherwise;
(c) in connection with any other legal proceedings arising out of this
Ordinance;
(d) to the disclosure of information to the police or the Independent
Commission Against Corruption, at the request of the Attorney General,
relevant to the proper investigation of any criminal complaint;
(e) to the disclosure of information by the Monetary Authority with a
view to the institution of, or otherwise for the purposes of, any
disciplinary proceedings relating to the exercise of his professional
duties by an auditor or former auditor of an authorized institution or
former authorized institution, whether or not the auditor or former
auditor, as the case may be, was appointed under section 50, 59 or 63;
(Replaced 43 of 1990 s. 9. Amended 67 of 1992 s. 9; 82 of 1992 s. 20)
(f) to the disclosure of information by the Monetary Authority to the
Governor, the Financial Secretary, the Secretary for Financial Services,
an inspector appointed by the Financial Secretary to investigate the
affairs of a company, a person holding an authorized statutory office or
any public officer authorized by the Financial Secretary for the purposes
of this paragraph where, in the opinion of the Monetary Authority-
(Amended L.N. 96 of 1993)
(i) it is desirable or expedient that information should be so disclosed
in the interests of depositors or potential depositors or the public
interest; or
(ii) such disclosure will enable or assist the recipient of the
information to exercise his functions and it is not contrary to the
interests of depositors or potential depositors or the public interest
that the information should be so disclosed; (Replaced 95 of 1991 s. 40)
(g) to the disclosure of information by the Monetary Authority to an
auditor of an authorized institution or former authorized institution, or
to a former auditor, for the purpose of enabling or assisting the Monetary
Authority to discharge his functions under this Ordinance; (Replaced 43 of
1990 s. 9. Amended 95 of 1991 s. 40)
(h) subject to subsection (5D), to the disclosure of information by the
Monetary Authority with the consent of-
(i) the person from whom the information was obtained or received; and
(ii) where the information does not relate to such person, the person to
whom it relates; or (Added 95 of 1991 s. 40)
(i) to the disclosure of information which has been made available to
the public by virtue of being disclosed in any circumstances in which, or
for any purpose for which, disclosure is not precluded by this section or
section 121. (Added 95 of 1991 s. 40)
(5A) For the purposes of subsection (5) (f), "authorized statutory
office" means-
(a) the Insurance Authority under the Insurance Companies Ordinance
(Cap. 41); or (Amended 10 of 1989 s. 65)
(b) the securities and Futures Commission. (Replaced 10 of 1989 s. 65)
(c)- (d) (Repealed 10 of 1989 s. 65)
(Added 68 of 1988 s. 2)
(5B) The Legislative Council may, by resolution, amend subsection (5A).
(Added 68 of 1988 s. 2)
(5C) The Monetary Authority may attach a condition to any disclosure of
information made pursuant to subsection (5) (b), (c), (d), (e), or (f),
and shall attach a condition to any disclosure of information made
pursuant to subsection (5) (g), that neither-
(a) the person to whom the information has been disclosed; nor
(b) any person obtaining or receiving the information (whether directly
or indirectly) from the person referred to in paragraph (a), shall
disclose that information to any other person without the consent of the
Monetary Authority. (Added 95 of 1991 s. 40)
(5D) Subsection (2) (h) shall not operate to require the Monetary
Authority to disclose in or in relation to any civil proceedings any
information which he may disclose, or has disclosed, pursuant to that
subsection. (Added 95 of 1991 s. 40)
(6) Any person who-
(a) contravenes subsection (1);
(b) aids, abets, counsels or procures any person to contravene
subsection (1); or
(c) knowing that the condition referred to in subsection (5C) has been
attached to a disclosure of information made pursuant to subsection (5),
contravenes, or aids, abets, counsels or procures any person to
contravene, that condition, (Added 95 of 1991 s. 40) commits an offence
and is liable-
(i) on conviction upon indictment to a fine of $500,000 and to
imprisonment for 2 years; or
(ii) on summary conviction to a fine of $50,000 and to imprisonment for
6 months. (Amended 3 of 1990 s. 46; 82 of 1992 s. 20)
121. Disclosure of information relating to authorized institutions
(1) Subject to subsection (3), and notwithstanding section 120, the
Monetary Authority may disclose information to an authority in a place
outside Hong Kong where-
(a) that authority exercises functions in that place corresponding to
the functions of-
(i) the Monetary Authority; or
(ii) an authorized statutory office within the meaning of section 120
(5A); and
(b) in the opinion of the Monetary Authority-
(i) that authority is subject to adequate secrecy provisions in that
place; and
(ii) it is desirable or expedient that information should be so
disclosed in the interests of depositors or potential depositors or the
public interest; or
(iii) such disclosure will enable or assist the recipient of the
information to exercise his functions and it is not contrary to the
interests of depositors or potential depositors or the public interest
that the information should be so disclosed. (Replaced 95 of 1991 s. 41)
(2) subject to subsection (3) and notwithstanding section 120, the
Monetary Authority may, if he considers that it is in the interests of
customers of the representative office, provide to the appropriate
recognized banking supervisory authority of a place outside Hong Kong
which is, in his opinion, subject to adequate secrecy provisions in that
place information on matters relating to the affairs of a local
representative office which is maintained by a bank incorporated in that
place.
(2A) (Replaced 95 of 1991 s. 41)
(3) Under no circumstances shall the Monetary Authority provide any
information under this section relating to the affairs of any individual
customer of an authorized institution or a local representative office.
(Amended 95 of 1991 s. 41) (Amended 82 of 1992 s. 25)
122. Winding-up of authorized institutions
(1) The provisions of the Companies Ordinance (Cap. 32) with regard to a
creditors' voluntary winding-up shall not apply to authorized
institutions.
(2) On a petition by the Financial Secretary, acting in accordance with
a direction of the Governor in Council under section 53 (1) (iii), the
High Court may-
(a) on any ground specified in section 177 of the Companies Ordinance
(Cap. 32); or
(b) if it is satisfied that it is in the public interest that the
authorized institution or former authorized institution should be wound
up, order the winding-up of an authorized institution or former authorized
institution in accordance with the provisions of the Companies Ordinance
(Cap. 32) relating to the winding-up of companies.
(3) Where before the presentation of a petition for the winding-up of an
authorized institution by the court, whether or not the petition is
presented by the Financial Secretary, the Monetary Authority has assumed
control of the business of the institution under section 52 (1) (C) or
pursuant to an order of the Governor in Council under section 53 (1) (ii)
or some other person has assumed control of the business of the
institution pursuant to a direction of the Monetary Authority under
section 52 (1) (C) or an order of the Governor in Council under section 53
(1) (ii) and such control has continued at all times until the
presentation of the petition, and a winding-up order is made thereon,
then, notwithstanding the provisions of section 184 (2) of the Companies
Ordinance (Cap. 32), the winding-up of the institution by the court shall,
for the purposes of sections 170, 179, 182, 183, 266, 267, 269 and 274,
and paragraphs (d), (e), (h), (i), (j), (k), (l) and (0) of section 271
(1), of the Companies Ordinance (Cap. 32), be deemed to have commenced at
the time the Monetary Authority or such other person assumed control of
the business of the institution. (Amended 95 of 1991 s. 42; 82 of 1992 s.
25)
(4) Where the Monetary Authority has assumed control of the business of
an authorized institution under section 52 (1) (C) or pursuant to an order
of the Governor in Council under section 53 (1) (ii) or some other person
has assumed control of the business of an authorized institution pursuant
to a direction of the Monetary Authority under section 52 (1) (C) or an
order of the Governor in Council under section 53 (1) (ii), nothing in
section 182 of the Companies Ordinance (Cap. 32) shall invalidate any
disposition of the property of the institution made by it under the
direction of the Monetary Authority or such person acting bona fide in the
course of the carrying on of the business of the institution. (Amended 82
of 1992 s. 25)
(5) Where the Financial Secretary is entitled to petition the High Court
by virtue of section 117 (5) (f), the High Court may wind up a deposit-
taking company or restricted licence bank or former deposit-taking company
or restricted licence bank in accordance with the provisions of the
Companies Ordinance (Cap. 32) relating to the winding-up of companies if-
(a) the deposit-taking company or restricted licence bank is unable to
pay sums due and payable to its depositors or is able to pay such sums
only by defaulting on its obligations; or
(b) the value of the deposit-taking company's or restricted licence
bank's assets is less than the amount of its liabilities. (Replaced 3 of
1990 s. 47)
(6) Nothing in this section shall authorize the winding-up of a former
deposit-taking company or restricted licence bank which does not continue
to have any liability in respect of any deposit for which it had a
liability at the time when it was registered or licensed. (Amended 3 of
1990 s. 47)
123. Offences by directors, managers, trustees, employees and agents
Any director, manager, trustee, employee or agent of any authorized
institution who, with intent to deceive-
(a) wilfully makes, or causes to be made, a false entry in any book of
record or in any report, slip, document or statement of the business,
affairs, transactions, condition, assets or accounts of the institution;
(b) wilfully omits to make an entry in any book of record or in any
report, slip, document or statement of the business, affairs,
transactions, condition, assets or accounts of the institution, or
wilfully causes any such entry to be omitted; or
(c) wilfully alters, abstracts, conceals or destroys an entry in any
book of record, or in any report, slip, document or statement of the
business, affairs, transactions, condition, assets or accounts of the
institution, or wilfully causes any such entry to be altered, abstracted
concealed or destroyed, commits an offence and is liable-
(i) on conviction upon indictment to a fine of $500,000 and to
imprisonment for 5 years; or
(ii) on summary conviction to a fine of $50,000 and to imprisonment for
2 years.
124. Prohibition on receipt of commission by staff
Any director or employee of an authorized institution, who asks for or
receives, consents or agrees to receive any gift, commission, emolument,
service, gratuity, money, property or thing of value for his own personal
benefit or advantage or for that of any of his relatives, for procuring or
endeavouring to procure for any person any advance, loan, financial
guarantee or credit facility from that institution or the purchase or
discount of any draft, note, cheque, bill of exchange or other obligation
by that institution, or for permitting any person to overdraw any account
with that institution, commits an offence and is liable-
(a) on conviction upon indictment to a fine of $100,000 and to
imprisonment for 5 years; or
(b) on summary conviction to a fine of $50,000 and to imprisonment for 2
years.
125. Search warrants and seizures
(1) If a magistrate is satisfied by information on oath that there is
reasonable ground for suspecting that an offence under this Ordinance has
been committed, the magistrate may issue a warrant empowering any police
officer to enter and search any premises specified in the warrant.
(2) A police officer to whom a warrant is issued under subsection (1)
may-
(a) break open any outer or inner door of or in any premises which he is
empowered by the warrant to enter and search;
(b) inspect, seize and remove anything which the police officer has
reasonable grounds for believing to be or to contain evidence of an
offence under this Ordinance; and
(c) remove by force any person who obstructs any entry, search,
inspection, seizure or removal which he is empowered by this subsection to
make.
(3) A person from whom any books, accounts or other documents have been
seized and removed under subsection (2) shall, pending any proceedings for
an offence under this Ordinance, be entitled to take copies of or extracts
from such books, accounts or other documents.
(4) Any person who obstructs a police officer in the exercise of any
power conferred on him by subsection (2) commits an offence and is liable
on conviction upon indictment or on summary conviction to a fine of
$50,000 and to imprisonment for 6 months.
126. Defence where director or manager, etc. prosecuted
(1) Subject to subsection (2), in proceedings for an offence under this
Ordinance it shall be a defence for the person charged to prove that he
took all reasonable precautions and exercised all due diligence to avoid
the commission of such an offence by himself or any person under his
control. (Replaced 43 of 1990 s. 10)
(2) Subsection (1) shall not apply to an offence under section 46 (8),
47 (2) or (3), 50 (6), 64 (5), 72 (4), 73 (2), 97 (1), 117 (7), 118 (5),
120, 123 or 124. (Amended 3 of 1990 s. 48; 95 of 1991 s. 43)
126A. Limit of time for complaint or information
(1) In any case of an offence other than an indictable offence the
complaint shall be made to or information laid before a magistrate, or an
officer of a magistrate's court who is authorized in writing for that
purpose by a magistrate, at any time within 3 years after the commission
of the offence and within 6 months after evidence sufficient in the
opinion of the Attorney General to justify prosecution comes to his
knowledge.
(2) For the purposes of subsection (1) a certificate of the Attorney
General as to the date on which such evidence as is mentioned in
subsection (1) came to his knowledge shall be conclusive evidence of that
fact. (Added 43 of 1990 s. 11)
127. Indemnity
No liability shall be incurred by-
(a) any public officer;
(b) any person authorized or employed by the Monetary Authority;
(Amended 82 of 1992 s. 25)
(c) any person appointed under section 52 (1) (B), or by order of the
Governor in Council under section 53 (1) (ii), to advise an authorized
institution in the proper conduct of its business;
(d) any person who has assumed control of the business of an authorized
institution pursuant to a direction under section 52 (1) (C) or an order
of the Governor in Council under section 53 (1) (ii); or
(e) any person appointed under section 117 (2), as a result of anything
done or omitted to be done by him bona fide in the exercise or purported
exercise of any functions conferred or imposed by or under this Ordinance.
128. (Repealed 95 of 1991 s. 44)
129. Validity of contract in contravention of this Ordinance or any
Ordinance repealed by this Ordinance
(1) Subject to section 70B (4) and (5), the contravention of any
prohibition in this Ordinance or in any Ordinance repealed by this
Ordinance on the entering into of any contract shall not render that
contract unenforceable. (Amended 64 of 1987 s. 27; 95 of 1991 s. 45)
(2) Subsection (1) shall be deemed to have had effect from 1 April 1976,
so, however, that nothing in that subsection as read with this subsection
shall have effect in relation to any legal proceedings commenced before
the commencement of this Ordinance.
(3) Subject to section 70B (4) and (5), for the avoidance of doubt, it
is hereby declared that the contravention of any prohibition in this
Ordinance or in any Ordinance repealed by this Ordinance on the entering
into of any contract shall not render that contract void. (Added 95 of
1991 s. 45)
(4) In this section, "contract" includes a deed which is not otherwise a
contract. (Added 95 of 1991 s. 45)
130. Revocation or suspension not affect right
(1) (Repealed 95 of 1991 s. 46)
(2) Where the licence or, as the case may be, the registration of an
authorized institution is revoked or suspended under this Ordinance, such
revocation or suspension shall not affect any right-
(a) of any person against the institution; or
(b) of the institution against any person.
131. Recovery of fees, expenses, etc.
(1) There shall be recoverable at the suit of the Attorney General as a
civil debt due to the Crown from the authorized institution concerned-
(Amended 43 of 1990 s. 12)
(a) the amount of any fees payable under section 19, 23, 26, 45, 48 or
51; (Amended 95 of 1991 s. 47)
(b) any remuneration and expenses payable by the authorized institution
to any person appointed under section 52 (1) (B) or by order of the
Governor in Council under section 53 (1) (ii) to advise the institution in
the proper conduct of its business;
(c) any remuneration and expenses payable by the authorized institution
to the Monetary Authority or to a person authorized by the Monetary
Authority to assist him in the control and carrying on of the business of
the institution or to any other person who has assumed control of the
business of the institution pursuant to a direction under section 52 (1)
(C) or an order of the Governor in Council under section 53 (1) (ii); and
(Amended 67 of 1992 s. 10; 82 of 1992 s. 21)
(d) any expenses or dered by the Financial Secretary to be defrayed by
the authorized institution under section 55 (3). (Amended 67 of 1992 s.
10)
(e) (Repealed 67 of 1992 s. 10)
(2) There shall be recoverable, at the suit of the attorney general, as
a civil debt due from the applicants, jointly and severally, to the Crown,
any expenses ordered by the Financial Secretary to be defrayed by the
applicants under section 55 (3).
(3) Any sum recoverable under this section at the suit of the Attorney
General shall be a debt due to the Crown within the meaning of section 265
(1) (a) of the Companies Ordinance (Cap. 32) and section 38 (1) (a) of the
Bankruptcy Ordinance (Cap. 6).
(4) The fees, remuneration, expenses and sums of money recoverable under
this section shall be paid to the Director of Accounting Services, (Added
82 of 1992 s. 21)
131A. Cost related fees to be paid into Exchange Fund
Any part of moneys paid to the Director of Accounting Services under
section 19, 23, 26, 45, 48, 51 or 131 (4), which relates to the
administrative or other costs incurred or likely to be incurred by the
Exchange Fund in connection with or otherwise in relation to the
performance of any function under this Ordinance, shall be paid by him
into the Exchange Fund.
(Added 82 of 1992 s. 22)
132. Use of English language
(1) All entries in books and accounts kept by authorized institutions
shall be recorded in the English language and the Arabic system of
numerals shall be employed.
(2) All forms and information required to be sent and all returns
required to be made to the Monetary Authority pursuant to any of the
Provisions of this Ordinance shall be complied in the English language and
the Arabic system of numerals and, if any such form, information or return
is a translation, be certified to the satisfaction of the Monetary
Authority as a true and correct translation. (Amended 82 of 1992 s. 25)
(3) Every director and every manager of an authorized institution which
contravenes subsection (1) or (2) commits an offence and is liable on
conviction upon indictment or on summary conviction to a fine of $50,000
and, in the case of a continuing offence, to a further fine of $5,000 for
every day during which the offence continues.
133. Power to specify forms
The Monetary Authority may specify the form of application for licensing
or registration and of any notice, certificate or other document required
for the purposes of this Ordinance.
(Amended 82 of 1992 s. 25)
134. Service of documents
Without limiting the generality of section 356 of the Companies
Ordinance (Cap. 32), a document may be served on an authorized institution
by leaving it at or sending it by post to its principal place of business
in Hong Kong.
135. Power to amend Schedules
(1) The Governor in Council may, by notice in the Gazette, amend the
First Schedule.
(2) The Legislative Council may, by resolution, amend the Second
Schedule.
(3) The Financial Secretary may, by notice in the Gazette, amend the
Third, the Fourth or the Fifth Schedule. (Amended 95 of 1991 s. 48)
(4) (Repealed 95 of 1991 s. 48)
136. Consent of Attorney General
No prosecution in respect of any offence under this Ordinance shall be
instituted without the consent in writing of the Attorney General.
137. (Amendments Incorporated)
137A. Exclusion of provisions of Gambling Ordinance
(1) Subject to subsection (2), the Gambling Ordinance (Cap. 148) shall
not apply to any transaction proposed to be entered into, or entered into,
by an authorized institution.
(2) Subsection (1) shall not apply to a transaction, or a transaction
belonging to a class of transactions, specified by the Monetary Authority
by notice in the Gazette as being a transaction, or a class of
transactions, as the case may be, to which that subsection shall not
apply. (Amended 82 of 1992 s. 25)
(Added 64 of 1987 s. 28)
PART XXII TRANSITIONAL, SAVINGS AND REPEAL
138. Interpretation
In this Part, unless the context otherwise requires-
"former bank" means a bank which, immediately before the commencement of
this Ordinance, held a former banking licence;
"former Banking Advisory Committee" means the Banking Advisory Committee
established by section 3 of the former Banking Ordinance and as
constituted immediately before the commencement of this Ordinance;
"former banking licence" means a licence granted under section 7 or 42
of the former Banking Ordinance and in force immediately before the
commencement of this Ordinance;
"former Banking Ordinance (Cap. 155, 1983 Ed.)" means the Banking
Ordinance 1964 repealed by this Ordinance;
"former Commissioner" means the person who was, immediately before the
commencement of this Ordinance, the Commissioner of Banking under section
4 of the former Banking Ordinance and, for the purposes of this Part, any
reference in the former Deposit-taking Companies Ordinance to the
Commissioner of Deposit-taking Companies shall be deemed to be a reference
to such Monetary Authority of Banking;
"former Deposit-taking Companies Advisory Committee" means the Deposit-
taking Companies Advisory Committee established by section 4 of the former
Deposit-taking Companies Ordinance and as constituted immediately before
the commencement of this Ordinance;
"former Deposit-taking Companies Ordinance (Cap. 328, 1983 Ed.)" means
the Deposit-taking Companies Ordinance 1976 repealed by this Ordinance;
"former deposit-taking licence" means a licence granted under section
16B of the former Deposit-taking Companies Ordinance and in force
immediately before the commencement of this Ordinance;
"former registration" means registration under section 10 of the former
Deposit-taking Companies Ordinance which was in force immediately before
the commencement of this Ordinance.
139. Appointed members of former committees to continue in office
(1) Any member of the former Banking Advisory Committee who was such a
member by virtue of an appointment under section 3 (2) of the former
Banking Ordinance shall, on and from the commencement of this Ordinance,
be deemed to be a member of the Banking Advisory Committee as if, on that
commencement, he had been appointed under section 4 (2) to be a member of
the Banking Advisory Committee for the period he had left to serve,
immediately before that commencement, as a member of the former Banking
Advisory Committee and, for that purpose and for that period, the terms on
which he was so appointed as a member of the former Banking Advisory
Committee shall be the terms on which he shall be a member of the Banking
Advisory Committee.
(2) Any member of the former Deposit-taking Companies Advisory Committee
who was such a member by virtue of an appointment under section 5 (1) (c)
of the former Deposit-taking Companies Ordinance shall, on and from the
commencement of this Ordinance, be deemed to be a member of the Deposit-
taking Companies Advisory Committee as if, on that commencement, he had
been appointed under section 5 (2) to be a member of the Deposit-taking
Companies Advisory Committee for the period he had left to serve,
immediately before that commencement, as a member of the former
Deposit-taking Companies Advisory Committee and, for that purpose and for
that period, the terms on which he was so appointed as a member of the
former Deposit-taking Companies Advisory Committee shall be the terms on
which he shall be a member of the Deposit-taking Companies Advisory
Committee.
140. (Repealed 82 of 1992 s. 23)
141. Authorized and employed persons to continue to be authorized and
employed
Any person who was, immediately before the commencement of this
Ordinance, authorized or employed under section 4A of the former Banking
Ordinance to assist the former Monetary Authority in the exercise of his
functions and duties under the former Banking Ordinance, either generally
or in any particular case, shall, on and from the commencement of this
Ordinance, be deemed, in the like capacity, to be authorized or employed
to assist the Commissioner in the exercise of his functions under this
Ordinance as if, on that commencement, he had been, in the like capacity,
authorized or employed under section 8 to assist the Commissioner in the
exercise of his functions under this Ordinance for the period he had left,
immediately before that commencement, to be so authorized or employed
under the former Banking Ordinance.
142. Former applications for licences, etc. deemed to be applications
under this Ordinance
Where, immediately before the commencement of this Ordinance, there was
in existence-
(a) an application for a former banking licence under section 6 of the
former Banking Ordinance in relation to which the Governor in Council had
not granted or refused a former banking licence under section 7 of the
former Banking Ordinance;
(b) an application for former registration under section 9 of the former
Deposit-taking Companies Ordinance in relation to which there has not been
any registration or refusal of registration by the Monetary Authority
under section 10 of the former Deposit-taking Companies Ordinance; or
(c) an application for a former deposit-taking licence under section 16A
of the former Deposit-taking Companies Ordinance in relation to which the
Financial Secretary had not granted or refused a former deposit-taking
licence under section 16B of the former Deposit-taking Companies
Ordinance, then-
(i) in the case of an application referred to in paragraph (a), the
application shall be deemed to be an application under section 15 for a
banking licence;
(ii) in the case of an application referred to in paragraph (b), the
application shall be deemed to be an application under section 20 for
registration; and
(iii) in the case of an application referred to in paragraph (c), the
application shall be deemed to be an application under section 24 for a
deposit-taking licence, and the provisions of this Ordinance shall apply
accordingly.
143. Former licences, etc. deemed to be licences, etc. under this
Ordinance.
(1) Any former banking licence shall, on and from the commencement of
this Ordinance, be deemed to be-
(a) in the case of a former banking licence granted under section 7 of
the former Banking Ordinance, a banking licence granted under section 16;
(Amended 43 of 1990 s. 13)
(b) (Repealed 43 of 1990 s. 13)
and the provisions of this Ordinance shall apply accordingly.
(2) Any former registration shall, on and from the commencement of this
Ordinance, be deemed to be registration under section 21, and the
provisions of this Ordinance shall apply accordingly.
(3) Any former deposit-taking licence shall, on and from the
commencement of this Ordinance, be deemed to be a deposit-taking licence
granted under section 25, and the provisions of this Ordinance shall apply
accordingly.
(4) Notwithstanding Part VII of the former Deposit-taking Companies
Ordinance, any former registration or former deposit-taking licence which
was, immediately before the commencement of this Ordinance, suspended
under that Part shall, on and from that commencement, but subject to
section 146, be deemed, for the purposes of subsections (2) and (3) and
the definitions of "former registration" and "former deposit-taking
licence" in section 138, to be in force immediately before that
commencement.
144. Date of payment of certain fees
Where, under this Ordinance, a bank, registered deposit-taking company
or licensed deposit-taking company is required to pay any fee specified in
the Second Schedule, irrespective of whether the words "authorized
institution" are used to create any such requirement, by reference to the
anniversary of the date on which the bank, registered deposit-taking
company or licensed deposit-taking company was licensed or registered, as
the case may be, or words to that effect, and the banking licence,
registration or deposit-taking licence, as the case may be, held by that
bank, registered deposit-taking company or licensed deposit-taking company
is deemed by virtue of section 143 to be a banking licence, registration
or deposit-taking licence, as the case may be, then, for the purposes of
paying any such fee, and notwithstanding any other provision of this
Ordinance, such reference to the anniversary of the date on which the
bank, registered deposit-taking company or licensed deposit-taking company
was licensed or registered shall be the anniversary of the date on which
the bank, registered deposit-taking company or licensed deposit-taking
company was licensed or registered, as the case may be, under the former
Banking Ordinance or former Deposit-taking Companies Ordinance, as the
case may be.
(Amended 43 of 1990 s. 14)
145. Conditions attached to former licences, etc. deemed to be
conditions under this Ordinance
(1) Where, immediately before the commencement of this Ordinance, there
was in force any condition attached to a former banking licence under
section 7 (1) (b) or 7A of the former Banking Ordinance and, on and from
that commencement, the former banking licence is deemed by virtue of
section 143 to be a banking licence, then, on and from that commencement,
any such condition shall be deemed to be a condition attached to the
banking licence as if, on that commencement, the Governor in Council had
attached such condition under section 17 to the banking licence, and the
provisions of this Ordinance shall apply accordingly.
(2) Where, immediately before the commencement of this Ordinance, there
was in force any condition attached to a former deposit-taking licence
under section 16B (1) (a) or (3) of the former Deposit-taking Companies
Ordinance and, on and from that commencement, the former deposit-taking
licence is deemed by virtue of section 143 to be a deposit-taking licence,
then, on and from that commencement, any such condition shall be deemed to
be a condition attached to the deposit-taking licence as if, on that
commencement, the Financial Secretary had attached such condition under
section 25 (3) to the deposit-taking licence, and the provisions of this
Ordinance shall apply accordingly.
(3) Where any local branch to which section 44 (3) applies had in force,
immediately before the commencement of this Ordinance, an approval under
section 12A (1) or (3) of the former Banking Ordinance or section 16H (1)
or (3) of the former Deposit-taking Companies Ordinance to which was
attached any condition under section 12A (4) of the former Banking
Ordinance or section 16H (4) of the former Deposit-taking Companies
Ordinance and which condition was in force immediately before that
commencement, then, on and from that commencement, any such condition
shall be deemed to be attached to the approval under section 44 of the
local branch as if, on that commencement, the Commissioner had attached
such condition under section 44 (4) to the approval, and the provisions of
this Ordinance shall apply accordingly.
(4) Where any local representative office to which section 46 (2)
applies had in force, immediately before the commencement of this
Ordinance, an approval under section 12C (1) or (2) of the former Banking
Ordinance to which was attached any condition under section 12C (4) of the
former Banking Ordinance and which condition was in force immediately
before that commencement, then, on and from that commencement, any such
condition shall be deemed to be attached to the approval under section 46
of the local representative office as if, on that commencement, the
Commissioner had attached such condition under section 46 (4) to the
approval, and the provisions of this Ordinance shall apply accordingly.
(5) Where any overseas branch or overseas representative office to which
section 49 (3) applies had in force, immediately before the commencement
of this Ordinance, an approval under section 12F (1) or (3) of the former
Banking Ordinance or section 16J (1) or (3) of the former Deposit-taking
Companies Ordinance to which was attached any condition under section 12F
(4) of the former Banking Ordinance or section 16J (4) of the former
Deposit-taking Companies Ordinance and which condition was in force
immediately before that commencement, then, on and from that commencement,
any such condition shall be deemed to be attached to the approval under
section 49 of the overseas branch or overseas representative office, as
the case may be, as if, on that commencement, the Commissioner had
attached such condition under section 49 (4) to the approval, and the
provisions of this Ordinance shall apply accordingly.
146. Suspension of former registration, etc. deemed to be suspension
under this Ordinance
Where any former registration or former deposit-taking licence which is,
on and from the commencement of this Ordinance, deemed by virtue of
section 143 to be registration or a deposit-taking licence, was,
immediately before that commencement, suspended under Part VII of the
former Deposit-taking Companies Ordinance, then, on and from that
commencement, that registration or that deposit-taking licence, as the
case may be, shall, in the like manner, be deemed to be suspended under
Part VI for the period concerned of such suspension left to serve
immediately before that commencement as if, on that commencement and for
that period, the designated authority under Part VI had suspended that
registration or deposit-taking licence, as the case may be, and the
provisions of this Ordinance shall apply accordingly.
147. Actions, etc. under Part IV of former Banking Ordinance deemed to
be actions under Part X of this Ordinance
Where an act, matter or thing has been done under Part IV of the former
Banking Ordinance by the Commissioner, the Financial Secretary or the
Governor in Council to or in relation to a former bank and, on and from
the commencement of this Ordinance, the former banking licence held by the
former bank is deemed by virtue of section 143 to be a banking licence,
then, on and from that commencement, to the extent that but for the
enactment of this Ordinance that act, matter or thing would on or after
that commencement have had any force or effect or been in operation, that
act, matter or thing shall, in the like manner, be deemed to have been
done under Part X by the Commissioner, the Financial Secretary or the
Governor in Council, as the case may be, to or in relation to the bank
which holds that banking licence as if, on that commencement, that act,
matter or thing were, to that extent, done under Part X by the
Commissioner, the Financial Secretary or the Governor in Council, as the
case may be, to or in relation to the bank, and the provisions of this
Ordinance shall apply accordingly. (Amended 3 of 1990 s. 49)
148. Transitional provision in relation to certain letters of comfort
A letter of comfort which was, immediately before the day of -[1]-
commencement of the Banking (Amendment) (No. 2) Ordinance 1991 (95 of
1991), deemed by section 148 at all times to have been accepted under
paragraph (c) of the proviso to section 81 (2) shall, on and from that
date, be deemed at all times to have been accepted under section 81 (6)
(b), and the provisions of this Ordinance shall apply accordingly.
(Replaced 95 of 1991 s. 49)
-[1]- Commencement date-1.8.1991.
148A. Transitional provisions in relation to section 87
(1) Where, immediately before 1 September 1986, any period allowed under
the proviso to section 27 (1) of the former Banking Ordinance, or under
section 23B (3) of the former Deposit-taking Companies Ordinance, had not
expired then, on and from that date, the unexpired portion of that period
shall be deemed to be a further period approved under, and for the
purposes of, the proviso to section 87 (1) as if, on that date, the
Commissioner had given such approval under the proviso to section 87 (1),
and the provisions of this Ordinance shall apply accordingly.
(2) Where, immediately, before 1 September 1986, any period allowed
under section 23B(2) of the former Deposit-taking Companies Ordinance had
not expired then, on and from that date, the unexpired portion of that
period shall be deemed to be a further period approved under, and for the
purposes of, section 87 (2) (a) as if, on that date, the Commissioner had
given such approval under section 87 (2) (a), as if, on that date, the
Commissioner had given such approval under section 87 (2) (a), and the
provisions of this Ordinance shall apply accordingly.
(3) Where, immediately before 1 September 1986, there was in force any
approval under section 27 (2) of the former Banking Ordinance then, on and
from that date, any such approval shall be deemed to be an approval under,
and for the purposes of, section 87 (2) (b) as if, on that date, the
Commissioner had given such approval under section 87 (2) (b).
(Added 64 of 1987 s. 29)
149. Transitional provisions in relation to amendments made by Banking
(Amendment) Ordinance 1990
(1) In this section-
"deposit-taking licence" means a deposit-taking licence-
(a) granted, or deemed to be granted, under section 25 as in force at
any time before the relevant day; and
(b) in force immediately before the relevant day;
"licensed deposit-taking company" means a company which, immediately
before the relevant day, held a deposit-taking licence;
"relevant day" means the day of commencement of the relevant Ordinance;
"relevant Ordinance" means the Banking (Amendment) Ordinance 1990 (3 of
1990).
(2) Where, immediately before the relevant day, there was an application
for a deposit-taking licence under section 24 in relation to which the
Financial Secretary had not granted or refused a deposit-taking licence
under section 25 then, on and from the relevant day, that application
shall be deemed to be an application under section 24 for a restricted
banking licence, and the provisions of this Ordinance shall apply
accordingly.
(3) Any deposit-taking licence shall, on and from the relevant day, be
deemed to be a restricted banking licence granted under section 25, and
the Provisions of this Ordinance shall apply accordingly.
(4) Notwithstanding Part VI as in force immediately before the relevant
day, any deposit-taking licence which was, immediately before the relevant
day, suspended under that Part shall, on and from the relevant day, be
deemed, for the purposes of subsection (3) and the definition of "deposit-
taking licence" in subsection (1), to have been in force immediately
before the relevant day.
(5) Where, immediately before the relevant day, there was in force any
condition attached to a deposit-taking licence under section 25 and, on
and from the relevant day, the deposit-taking licence is deemed by virtue
of subsection (3) to be a restricted banking licence, then, on and from
the relevant day, any such condition shall be deemed to be a condition
attached to the restricted banking licence as if, on the relevant day, the
Financial Secretary had attached such condition under section 25 to the
restricted banking licence, and the provisions of this Ordinance shall
apply accordingly.
(6) Where any deposit-taking licence which is, on and from the relevant
day, deemed by virtue of subsection (3) to be a restricted banking
licence, was, immediately before the relevant day, suspended under Part
VI, then, on and from the relevant day, that restricted banking licence
shall, in the like manner, be deemed to be suspended under Part VI for the
period concerned of such suspension left to serve immediately before the
relevant day as if, on the relevant day and for that period, the
designated authority under Part VI had suspended that restricted banking
licence, and the provisions of this Ordinance shall apply accordingly.
(7) Where an act, matter or thing has been done or deemed to be done
under Part X as in force at any time before the relevant day by the
Commissioner, the Financial Secretary or the Governor in Council to or in
relation to a licensed deposit-taking company and, on and from the
relevant day, the deposit-taking licence held by that company is deemed by
virtue of subsection (3) to be a restricted banking licence, then, on and
from the relevant day, to the extent that but for the enactment of the
relevant Ordinance that act, matter or thing would on or after the
relevant day have had any force of effect or been in operation, that act,
matter or thing shall, in the like manner, be deemed to have been done
under Part X by the Commissioner, the Financial Secretary or the Governor
in Council, as the case may be, to or in relation to the restricted
licence bank which holds that restricted banking licence as if, on the
relevant day, that act, matter or thing were, to that extent, done under
Part X by the Commissioner, the Financial Secretary or the Governor in
Council, as the case may be, to or in relation to the restricted licence
bank, and the provisions of this Ordinance shall apply accordingly.
(8) To the extent that any of the other provisions of this Part have any
force or effect or are in operation on or after the relevant day, any
reference in those provisions to-
(a) a deposit-taking licence shall be deemed to be a reference to a
restricted banking licence; and
(b) a licensed deposit-taking company shall be deemed to be a reference
to a restricted licence bank, and the provisions of this Ordinance shall
apply accordingly.
(9)-(13) (Repealed 95 of 1991 s. 50)
(Replaced 3 of 1990 s. 50)
150. Transitional provisions in relation to amendments made by Banking
(Amendment) (No.2) Ordinance 1991
(1) In this section-
"relevant day" means the day of -[1]-commencement of the relevant
Ordinance; -[1]- Commencement date -1.8.1991.
"relevant Ordinance" means the Banking (Amendment) (No. 2) Ordinance
1991 (95 of 1991).
(2) Section 70 shall not apply to a person becoming a controller of an
authorized institution on or from the relevant day where the acts or
circumstances by virtue of which he became such a controller substantially
occurred before the relevant day.
(3) The definition of "controller" in section 2 (1), and sections 70,
72, 72A and 126, as in force immediately before the relevant day, shall,
on and from the relevant day, apply to a person referred to in subsection
(2) as they would have applied to that person if the relevant Ordinance
had never been enacted.
(4) Where, immediately before the relevant day, there was in existence
an application for an approval under section 70 or 72 in relation to which
the Commissioner had not granted, or refused to grant, such approval,
then, at any time on and from the relevant day, the Commissioner may
grant, or refuse to grant, such approval as if the relevant Ordinance had
never been enacted, and any such grant of, or refusal to grant, such
approval made on or after the relevant day shall have such force or effect
or operation as such grant of, or refusal to grant, such approval would
have had if the relevant Ordinance had never been enacted.
(5) Where any person to whom section 70 or 72, as in force immediately
before the relevant day, applied to had not, before the relevant day, made
an application under that section for an approval in respect of the matter
by virtue of which that section applies to him, then, on and from the
relevant day, that section shall apply to him in respect of such matter as
if the relevant Ordinance had never been enacted.
(6) Where, immediately before the relevant day, there was in existence
an approval (including any conditions to which such approval is subject),
or refusal to grant an approval, under section 70 or 72, then, on and from
the relevant day, any such approval (including any conditions to which
such approval is subject) or refusal shall have such force or effect or
operation as such approval or refusal would have continued to have had if
the relevant Ordinance had never been enacted.
(7) For the avoidance of doubt, it is hereby declared that where
subsection (3), (4), (5) or (6) applies in relation to any person at any
time on and from the relevant day, such application shall be without
prejudice to the application of the provisions of Part XIII in relation to
such person at any time on and from the relevant day.
(8) Where an authorized institution contravenes section 74 (1)-
(a) by failing to appoint not less than one alternate chief executive of
the institution; and
(b) at any time before the expiration of the period of 6 months
immediately following the relevant day, or such further period as the
Monetary Authority approves for the purposes of the application of section
71 to any person the institution proposes to appoint as an alternate chief
executive, (Amended 82 of 1992 s. 25) section 74 (2) shall not apply in
relation to that contravention (including at any time on or after the
expiration of that period or further period, as the case may be).
(9) The financial exposure of an authorized institution under section 81
(2) shall not include financial exposure for any item referred to in
paragraph (c) of that section until a notice under section 81 (3) in
respect of that item is published in the Gazette.
(10) Where an authorized institution contravenes section 81 (1), 83 (1)
or (2) (a), 87 (1), 88 (1) or 90 (1) at any time before the expiration of
the period of one year immediately following the relevant day, or such
further period as the Monetary Authority approves in writing in any
particular case-
(Amended 82 of 1992 s. 25)
(a) section 81 (9), 83 (7), 87 (3), 88 (6) or 90 (3), as the case may
be, shall not, object to paragraph (b), apply in relation to that
contravention (including at any time on or after the expiration of that
period or further period, as the case may be); and
(b) the institution shall, for so long as that contravention of that
section continues, comply with that section as if the words "paid-up
capital and reserves" were substituted for the words "capital base"
appearing in that section and, accordingly, section 81 (9), 83 (7), 87
(3), 88 (6) or 90 (3), as the case may be, shall apply in relation to any
contravention of that section by that institution as that section applies
to that institution with those substituted words.
(Added 95 of 1991 s. 51)
151. Savings in relation to Exchange Fund (Amendment) Ordinance 1992
(1) Notwithstanding the repeal of section 8 of this Ordinance by section
16 of the relevant Ordinance, where immediately before the commencement of
the relevant Ordinance, a person was authorized or employed as a result of
an exercise of a power under that repealed section, the exercise of such
power shall continue to have effect and be regarded as having been
exercised by the Monetary Authority.
(2) The repeal referred to in subsection (1) shall not be construed as
affecting any authorization or employment to which section 141 applied
immediately before the commencement of the relevant Ordinance.
(3) Where immediately before the commencement of the relevant Ordinance-
(a) there was in existence an application to which section 142 then
applied;
(b) there was in force any condition to which section 145 (3), (4) or
(5) then applied;
(c) an act, matter or thing to which section 147 then applied had any
force or effect or was in operation;
(d) there was in existence an approval to which section 148A then
applied;
(e) an act, matter or thing to which section 149 (7) then applied had
any force or effect or was in operation; or
(f) there was in existence an application to which section 150 (4) then
applied, then, on and from the commencement of the relevant Ordinance, the
section of this Ordinance which, having regard to paragraph (a), (b), (c),
(d), (e) or (f) is the relevant section, shall, in relation to such
application, condition, act, matter or thing or approval as may be
appropriate, be construed and have effect as if any reference therein to
the "Commissioner" were substituted for by a reference to the "Monetary
Authority".
(4) Notwithstanding the amendment of section 150 (8) and (10) by section
25 (2) of the relevant Ordinance, any further period granted under section
150 (8) or (10) and which on the commencement of the relevant Ordinance
had not expired, shall continue to run as if that section had not been so
amended.
(5) Where-
(a) any act, matter or thing which the Monetary Authority is required,
empowered or authorized to do under or pursuant to any enactment, on or
after the commencement of the relevant Ordinance, was done by any person
other than the Monetary Authority before such commencement; and
(b) the act, matter or thing was in force or existence immediately
before such commencement,
that act, matter or thing shall continue in force, or where appropriate,
to exist, on and from such commencement, as if it had been done by the
Monetary Authority.
(6) In this section "relevant Ordinance" means the Exchange
Fund (Amendment) Ordinance 1992 (82 of 1992). (Added 82 of 1992 s. 24)
FIRST SCHEDULE
[ss. 2(1), 12(3), 14(1)&135(1)]
SPECIFIED PERIOD AND SPECIFIED SUMS
1. 3 months.
2. The sum for the purposes of section 14 (1) (a) is $100,000 or an
equivalent amount in any other currency.
3. Sum for the purposes of section 14(1) (b) is $500,000 or an
equivalent amount in any other currency. (First Schedule replaced 3 of
1990 s. 51)
SECOND SCHEDULE
[ss. 19, 23, 26, 27, 45, 48, 51, 109, 135, (2) & 144]
FEES $
1. Annual banking licence fee for a bank, other than a restricted
licence bank (section 19 (1)) 474,340
2. Registration fee (section 23 (1)) 113,020
3. Renewal of registration fee (section 23 (2)) 113,020
4. Restricted banking licence fee (section 26 (1)) 384,270
5. Renewal of restricted banking licence fee (section 26 (2)) 384,270
6. Inspection fee (section 27 (3)) 10
7. Fee for a copy or extract, per page (section 27 (3)) 5
8. Fee for the establishment of a local branch of a bank, other than a
restricted licence bank (section 45 (1)) 22,400
9. Annual fee for maintaining a local branch of a bank, other than a
restricted licence bank (section 45 (1) and (2)) 22,400
10. Fee for the establishment of a local branch of a restricted licence
bank or deposit-taking company (section 45 (1)) 19,110
11. Annual fee for maintaining a local branch of a restricted licence
bank or deposit-taking company (section 45 (1) and (2)) 19,110
12. Fee for the establishment of a local representative office of a bank
incorporated outside Hong Kong (section 48 (1)) 22,400
13. Annual fee for maintaining a local representative office of a bank
incorporated outside Hong Kong (section 48 (1), (2) and (3)) 22,400
14. Fee for the establishment of an overseas branch of a bank, other
than a restricted licence bank (section 51 (1)) 44,800
15. Annual fee for maintaining an overseas branch of a bank, other than
a restricted licence bank (section 51 (1) and (2)) 44,800
16. Fee for the establishment of an overseas branch of a restricted
licence bank or deposit-taking company (section 51 (1)) 38,400
17. Annual fee for maintaining an overseas branch of a restricted
licence bank or deposit-taking company (section 51 (1) and (2)) 38,400
18. Fee for the establishment of an overseas representative office of a
bank, other than a restricted licence bank (section 51 (1)) 11,200
19. Annual fee for maintaining an overseas representative office of a
bank, other than a restricted licence bank (section 51 (1) and (2))
11,200
20. Fee for the establishment of an overseas representative office of a
restricted licence bank or deposit-taking company (section 51 (1)) 19,110
21. Annual fee for maintaining an overseas representative office of a
restricted licence bank or deposit-taking company (section 51 (1) and (2))
19,110
(Second Schedule replaced 26 of 1988 s. 2. Amended 14 of 1989 s. 2; 3 of
1990 s. 52; 29 of 1990 s. 2; 43 of 1990 s. 15; 41 of 1991 s. 2)
THIRD SCHEDULE [ss. 98 & 135 (3)]
CAPITAL ADEQUACY RATIO
1. In this Schedule-
"bank" means-
(a) any authorized institution (other than any restricted licence bank
or deposit-taking company the licence or registration of which is for the
time being suspended under this Ordinance); and (Amended 3 of 1990 s. 53)
(b) any bank incorporated outside Hong Kong which is not licensed under
this Ordinance, except a bank which is, in the opinion of the Monetary
Authority, not adequately supervised by a recognized banking supervisory
authority of the place in which it is incorporated;
"book value" in relation to any thing means its current book value after
deducting the amount of any specific provision made in the books against a
reduction in its value;
"capital base" means the capital base of an authorized institution
determined in accordance with paragraph 3;
"Claims on or claims guaranteed by, authorized institutions in Hong
Kong" do not include any claim on or guarantee by an authorized
institution the licence or registration of which, as the case may be, is
for the time being suspended under this Ordinance;
"Core Capital" means the sum, calculated in Hong Kong dollars, of the
book values of the capital items listed in paragraph 3 (a) to (f);
"debt securities" means securities other than shares or stocks;
"gold bullion held on an allocated basis" means gold bullion held by a
person other than the authorized institution, to the order of the
authorized institution, and which is separately ascertainable;
"guarantee" includes indemnity;
"multilatcral development bank" means the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the
Asian Development Bank, the African Development Bank, the European
Investment Bank, the Nordic Investment Bank, the Caribbean Development
Bank, the European Bank for Reconstruction and Development or the
International Finance Corporation; (Amended L.N. 407 of 1991)
"public sector entity in Hong Kong" means the Mass Transit Railway
Corporation, the Kowloon-Canton Railway Corporation, the Hong Kong Housing
Authority and any body specified by the Monetary Authority in a notice
published in the Gazette;
"public sector entity of any other Tier 1 country" means an entity which
is regarded as a public sector entity by a recognized banking supervisory
authority in the place in which it is incorporated;
"residential mortgage" means a mortgage under which-
(a) the borrower is an individual person;
(b) the principal sum does not exceed 90% of the purchase price or the
market value of the property, whichever amount is the lower;
(c) the debt is secured by a first legal charge on the property;
(d) the property secured by the charge is used as the borrower's
residence or as a residence by a tenant of the borrower;
"risk weighted exposure" means the risk weighted exposure of an
authorized institution determined in accordance with paragraph 4;
"Supplementary Capital" means the sum, calculated in Hong Kong dollars,
of the book values of the capital items listed in paragraph 3 (g) to (0)
calculated in accordance with that paragraph;
"Tier 1 country" means a country which is a member of the Organization
for Economic Co-operation and Development or a country which has concluded
a special lending arrangement with the International Monetary Fund
associated with the Fund's General Arrangements to Borrow, and also
includes Hong Kong;
"Tier 2 country" means any country which is not a Tier 1 country.
2. The capital adequacy ratio of an authorized institution shall be
calculated as the ratio, expressed as a percentage, of its capital base,
determined in accordance with paragraph 3, to its risk weighted exposure
determined in accordance with paragraph 4. 3. The capital base of an
authorized institution shall be determined by taking the sum, calculated
in Hong Kong dollars, of the book values (except in relation to
subparagraph (i), where the difference between the market value and the
book value is to be taken) of-
Category I-Core Capital
(a) its paid-up ordinary share capital;
(b) its paid-up, irredeemable, non-cumulative preference shares, that is
to say, shares that are irredeemable or that may be redeemed only with the
prior consent of the Monetary Authority; (Amended L.N. 82 of 1993)
(c) its share premium account;
(d) its reserves other than those referred to in subparagraphs (e), (g),
(h) and (i);
(e) its profit and loss account including its current year's profit or
loss;
(f) where the Monetary Authority requires under section 79A (1) a
provision of Part XV to apply to the authorized institution on a
consolidated basis, or requires under section 98 (2) the capital adequacy
ratio of the authorized institution to be calculated on a consolidated
basis, minority interests arising on such consolidation in the equity of
its subsidiaries: (Amended 95 of 1991 s. 52)
Provided that the amount to be included as Core Capital shall be
determined by deducting therefrom the book value calculated in Hong Kong
dollars of the goodwill of the institution;
Category II-Supplementary Capital
(g) its inner reserves;
(h) its reserves on revaluation of its real property, but not exceeding
70% of any surplus on revaluation;
(i) its latent reserves (i.e. the difference between the market value
and the book value) determined upon revaluation, of long-term holding of
equity securities listed on the Unified Exchange or on any exchange
referred to in the Schedule to the Securities (Specification of Approved
Assets, Liquid Assets and Ranking Liabilities) Notice 1990 (Cap. 333 sub.
leg.): (Amended L.N. 210 of 1990; L.N. 63 of 1991) Provided that-
(i) the amount of any increase in value to be included shall be limited
to 45% of such increase;
(ii) the amount of any diminution in value is deducted;
(j) its general provisions against doubtful debts but not including any
provisions against specific or identified losses and against the
diminution in the value of particular assets:
Provided that the amount included under this subparagraph may not exceed
1.25% of the figure derived by the calculation specified in subparagraph
(a) of paragraph 4 carried out in relation to the authorized institution;
(Amended L.N. 210 of 1990) (k) its perpetual subordinated debt where the
Monetary Authority is satisfied that under the terms of the debt
instrument the following conditions are met-
(i) the claims of the lender against the authorized institution are
fully subordinated to those of all unsubordinated creditors;
(ii) the debt is not secured against any assets of the authorized
institution;
(iii) the money advanced to the authorized institution is permanently
available to it;
(iv) the debt is not repayable without the prior consent of the Monetary
Authority;
(v) the money advanced to the authorized institution is available to
meet losses without the institution being obliged to cease trading;
(vi) the authorized institution is entitled to defer the payment of
interest where its profitability will not support such payment;
(l) its paid-up irredeemable cumulative preference shares, that is to
say, shares that are irredeemable or that may be redeemed only with the
prior consent of the Monetary Authority;
(m) its term subordinated debt, where the Monetary Authority is
satisfied that under the terms of the debt instrument the following
conditions are met-
(i) the claims of the lender against the authorized institution are
fully subordinated to those of all unsubordinated creditors;
(ii) the debt is not secured against any assets of the authorized
institution;
(iii) the debt has a minimum initial period to maturity of more than 5
years (and notwithstanding that that period may be reduced with the prior
consent of the Monetary Authority); (Amended L.N. 210 of 1990)
(iv) the debt is not repayable without the prior consent of the Monetary
Authority; Provided that-
(A) amounts included under this subparagraph shall be discounted by 20%
each year during the 4 years immediately preceding maturity; and
(B) the total amount included under this subparagraph and subparagraph
(n) shall not exceed in total, 50% of the total of the Core Capital;
(n) its paid-up term preference shares, where the Monetary Authority is
satisfied that the shares have been issued and remain subject to the
following conditions-
(i) the shares have a minimum initial period to maturity of more than 5
years;
(ii) the shares are not redeemable without the prior consent of the
Monetary Authority;
Provided that-
(A) amounts included under this subparagraph shall be discounted by 20%
of the original amount each year during the 4 years immediately preceding
maturity; and
(B) the total amount included under this subparagraph and subparagraph
(m) shall not exceed in total, 50% of the total of the Core Capital; and
(o) where the Monetary Authority requires under section 79A (1) a
provision of Part XV to apply to the authorized institution on a
consolidated basis, or requires under section 98 (2) the capital adequacy
ratio of the authorized institution to be calculated on a consolidated
basis, any minority interests arising on such consolidation in the paid-up
irredeemable cumulative preference shares and paid-up term preference
shares of its subsidiaries: (Amended 95 of 1991 s. 52)
Provided that the amount to be included as Supplementary Capital shall
not exceed the total of the amount determined as Core Capital, and by
deducting therefrom the sum calculated in Hong Kong dollars of the book
value of-
(A) its shareholding in any company which is a subsidiary or holding
company of the authorized institution, other than-
(i) any shareholding that falls to be deducted under subparagraph (B),
(C) or (D); and
(ii) where the Monetary Authority requires under section 79A (1) a
provision of part XV to apply to the authorized institution on a
consolidated basis, or requires under section 98 (2) the capital adequacy
ratio of the authorized institution to be calculated on a consolidated
basis its shareholding in any subsidiary the subject of such
consolidation; (Amended 95 of 1991 s. 52)
(B) its loans to shares and debentures issued by, and its guarantees of
the liabilities of, connected companies of the authorized institution
(other than shares that fall to be deducted under subparagraph (D)), where
in the opinion of the Monetary Authority the institution has made the
loans, is holding the shares or debentures or, as the case may be, has
given the guarantees, other than in the ordinary course of business; and
for the purposes of this subparagraph "shares" and "debentures" mean
shares and debentures within the meaning of section 2 (1) of the Companies
Ordinance (Cap. 32), and a company shall be treated as a connected company
of the institution if it is a subsidiary or the holding company of the
institution, or is otherwise of a description falling within section 64
(1) (b), (c), (d) or (e);
(C) its shareholding in any company in which the authorized institution
is entitled to exercise, or control the exercise of, more than 20% of the
voting power at general meetings of the company; and
(D) its holding of shares, stocks or debt securities issued by any bank
unless the Monetary Authority is satisfied that the holding is not the
subject of an arrangement in which 2 or more persons agree to hold each
other's capital or is not otherwise a strategic investment.
4. The risk weighted exposure of an authorized institution shall be that
figure derived by-
(a) adding together all the products achieved by-
(i) taking the book value, calculated in Hong Kong dollars, of each of
the items referred to in Table A in relation to the authorized
institution; and, in relation to each item multiplying that value by the
risk weight specified in Table A in relation to that item; and
(ii) taking the principal amount, calculated in Hong Kong dollars, of
each of the items referred to in Table B in relation to the authorized
institution; and, in relation to each item converting that principal
amount into a credit equivalent amount by multiplying the principal amount
by the credit conversion factor specified in Table B in relation to that
item, and then multiplying those credit equivalent amounts by the
appropriate risk weight specified in Table A as if the items to which they
relate were on-balance sheet (Table A) items; and
(b) subtracting from the sum calculated under subparagraph (a) the value
of general provisions not included in the capital base of the authorized
institution. (Replaced L.N. 210 of 1990)
TABLE A-ON-BALANCE SHEET ITEMS
Category I-Cash items
Item Nature of item Risk weight
1. Notes and coins. 0%
2. Hong Kong Government certificates of indebtedness. 0%
3. Gold bullion in the possession of an authorized institution or held
on an allocated basis, to the extent backed by gold liabilities. 0%
4. Gold held which is not backed by gold liabilities. 100%
5. Claims to the extent that they are collateralized by cash deposits
held by the authorized institution. 0%
6. Cash items in the course of collection. 20%
6A. Amounts due from the sale of securities, where the authorized
institution has executed the transaction on behalf of a customer or for
its own account, up to and including the fifth working day after the due
settlement date in respect of the transaction. (Added L.N. 146 of 1993) 0%
6B. Amounts due from the purchase of securities, where the authorized
institution has executed the transaction on behalf of a customer, up to
and including the fifth working day after the due settlement date in
respect of the transaction. (Added L.N. 146 of 1993) 0%
Category II-Claims on central governments and central banks
Item Nature of item Risk weight
7. Loans to, or loans to the extent that they are guaranteed by, the
Exchange Fund. 0%
8. Loans to, or loans to the extent that they are guaranteed by, the
central government or the central bank of any Tier 1 country 0%
9. Holdings of fixed interest securities with a residual maturity of
under 1 year or floating rate securities of any maturity issued by or
guaranteed by the central government or by the central bank of a Tier 1
country, or by the Exchange Fund, or claims to the extent that they are
collateralized by such securities. 10%
10. Holdings of fixed interest securities with a residual maturity of 1
year and over issued by or guaranteed by the central government or by the
central bank of a Ticr 1 country, or by the Exchange Fund, or claims to
the extent that they are collateralized by such securities. 20%
Item Nature of item Risk weight
11. Loans denominated in the currency of a Tier 2 country and funded in
that currency, to, or to the extent that they are guaranteed by, the
central government or the central bank of that country. 0%
12. Holdings of fixed interest securities with a residual maturity of
under 1 year or floating rate securities of any maturity issued by or
guaranteed by the central government or by the central bank of a Tier 2
country, where denominated and funded in the currency of that country.
10%
13. Holdings of fixed interest securities with a residual maturity of 1
year and over issued by or guaranteed by the central government or by the
central bank of a Tier 2 country, where denominated and funded in the
currency of that country. 20%
14. Other claims on the central government or on the central bank of a
Tier 2 country. 100%
Category III- Claims on Public Sector Entities
Item Nature of item Risk weight
15. Claims on or to the extent that they are guaranteed by, public
sector entities in Hong Kong. 20%
16. Claims on or to the extent that they are guaranteed by, public
sector entities of any other Tier 1 country. 20%
17. Claims on public sector entities of a Tier 2 country. 100%
Category IV-Claims on banks
Item Nature of item Risk weight
18. Claims on or to the extent that they are guaranteed by, authorized
institutions or banks incorporated in Tier 1 countries. 20%
19. Claims on or to the extent that they are guaranteed or
collateralized by securities issued by, a multilateral development bank.
20%
20. Claims on or to the extent that they are guaranteed by, and bank
other than a bank referred to in item 18 or 19, with a residual maturity
of under 1 year. 20%
21. Claims on or to the extent that they are guaranteed by, any bank
other than a bank referred to in item 18 or 19, with a residual maturity
of 1 year or more. 100%
Category V-Residential Mortgages
Item Nature of item Risk Weight
22. Loans fully secured by a residential mortgage. 50%
23. Securities backed by residential mortgages and participations in
residential mortgages. 50%
Category VI-Other assets
Item Nature of item Risk weight
24. Claims on non-bank private sector persons. 100%
Category VI-Other assets
Item Nature of item Risk weight
25. Investments in the equity or other capital instruments of other
banks, other than where deducted from the capital base. 100%
26. Premises, piant and equipment and other fixed assets for the
authorized institution's own use. 100%
27. Other interests in real property. 100%
28. All assets not elsewhere specified. 100%
TABLE B-OFF-BALANCE SHEET ITEMS
Item Nature of item Credit conversion factor
1. Direct credit substitutes Irrevocable off-balance sheet obligations
which carry the same credit risk as a direct extension of credit. This
includes guarantees, the confirming of letters of credit, standby letters
of credit serving as financial guarantees for loans, securities and
acceptances (including endorsements with the character of acceptances)
other than acceptances included in item 3. 100%
2. Transaction-related contingencies
Contingent liabilities which involve an irrevocable obligation of the
authorized institution to pay a beneficiary when a customer fails to
perform some contractual, non-financial obligation. This includes
performance bonds, bid bonds, warranties and standby letters of credit
related to a particular transaction. 50%
3. Trade-related contingencies
Contingent liabilities which relate to trade related obligations. This
includes letters of credit, acceptances on trade bills, shipping
guarantees and any other trade related contingencies. 20%
4. Sale and repurchase agreements (see Note 1) Arrangements whereby the
authorized institution sells a loan, security or other asset to another
person with a commitment to repurchase the asset at an agreed price on an
agreed future date. 100%
5. Assets sales or other transactions with recourse (see Note 1) Assets
sales where the holder of the asset is entitled to put the asset back to
the authorized institution within an agreed period or should the value or
credit quality of the asset deteriorate. 100%
6. Forward asset purchases (see Note 1) Commitment to purchase a loan,
security or other asset, including under a put option granted by the
authorized institution to another party, at specified future date on pre-
arranged terms. 100%
7. Partly paid-up shares and securities (held by the authorized
institution) The unpaid portion of shares or securities which the issuer
of such shares or securities may call for at a future date. 100%
Item Nature of item Credit conversion factor
8. Forward forward deposits placed (Amended L.N. 210 of 1990)
Any agreement between the authorized institution and another party whereby
the institution will place a deposit at an agreed rate of interest with
that party at some predetermined future date. 100%
9. Note issuance and revolving underwriting facilities
Arrangements whereby a borrower may draw down funds up to a prescribed
limit over a predefined period by making repeated note issues to the
market, and where, should the issue prove unable to be placed in the
market, the unplaced amount is to be taken up or funds made available by
the underwriter of the facility. 50%
10. Other commitments with an original maturity of under 1 year or which
may be cancelled at any time unconditionally by the authorized
institution. 0%
11. Other commitments with an original maturity of 1 year or over. 50%
12. Exchange rate contracts (see Note 2) (Calculated in accordance with
either the original exposure method or the current exposure method)
(a) credit conversion factors to be used in calculating in accordance
with original exposure method-contracts with an original maturity of-
(i) under 1 year, 2%
(ii) 1 year and less than 2 years; 5%
(iii) 2 years or more, the factor for 1 year and less than 2 years plus
for each additional year; 3%
(b) credit conversion factors to be used to determine the potential
future credit exposure in accordance with the current exposure method-
contracts with a residual maturity of-
(i) under 1 year; 1%
(ii) 1 year and over. 5%
13. Interest rate contracts (see Note 2) (Calculated in accordance with
either the original exposure method or the current exposure method)
(a) credit conversion factors to be used in calculating in accordance
with the original exposure method-contracts with an original maturity of-
(i) under 1 year; 0.5%
(ii) 1 year and under 2 years; 1%
(iii) 2 years or more, the factor for 1 year and under 2 years plus for
each additional year; 1%
(b) credit conversion factors to be used to determine the potential
future credit exposure in accordance with the current exposure method-
contracts with a residual maturity of-
(i) under 1 year; 0%
(ii) 1 year and over. 0.5%
Note
1. The appropriate risk weight to be used in relation to transactions to
which items 4, 5 and 6 apply, shall be determined on the basis of the
nature of the asset and not the nature of the counterpart with whom the
transaction has been entered into. Reverse repos (i. e. purchase and
resale agreements where the authorized institution is the recipient of the
asset) are to be regarded as collatcralized loans.
2. In relation to exchange rate contracts and interest rate contracts an
authorized institution shall, in determining the credit equivalent amount
use either the current exposure method of valuation or, with the agreement
of the Monetary Authority, the original exposure method of valuation.
(Third Schedule replaced L.N. 412 of 1989. Amended 82 of 1992 s. 25)
FOURTH SCHEDULE [ss. 102 & 135(3)] LIQUIDITY RATIO
1. In this Schedule-
"relevant bank" means-
(a) any authorized institution (other than a deposit-taking company or
restricted licence bank the registration or restricted banking licence of
which is for the time being suspended under this Ordinance); and (Replaced
L.N. 413 of 1987. Amended 3 of 1990 s. 54)
(b) any bank incorporated outside Hong Kong which is not licensed under
this Ordinance, except a bank which is, in the opinion of the Monetary
Authority, not adequately supervised by an appropriate, recognized banking
supervisory authority in the place in which it is incorporated, (Amended
82 of 1992 s. 25)
and includes the Exchange Fund established by the Exchange Fund Ordinance
(Cap. 66); (Amended 64 of 1987 s. 30)
"one-month liability" in relation to any authorized institution or
relevant bank means-
(a) any liability, other than a contingent liability, the effect of
which will or could be to reduce within 1 month the liquefiable assets of
that institution or relevant bank; and
(b) any contingent liability that in the opinion of the Monetary
Authority may result in a reduction within 1 month of the liquefiable
assets of that institution or relevant bank. (Amended 82 of 1992 s. 25)
2. The liquidity ratio of an authorized institution shall be calculated
as the ratio expressed as a percentage, between its liquefiable assets, as
specified in paragraph 3 and its qualifying liabilities, as specified in
paragraph 4.
3. The liquefiable assets of an authorized institution shall be the sum,
calculated in Hong Kong dollars, of such of the following amounts which
are free from encumbrances and freely remittable and payable- (Amended
L.N. 413 of 1987)
(a) the amount, if any by which its total one-month liabilities to
relevant banks are exceeded by the total one-month liabilities of relevant
banks to it;
(b) currency notes and coins held by the institution in Hong Kong
dollars or in any currency freely convertible into Hong Kong dollars;
(c) repayments to the institution in respect of loans that the
institution is not committed to continue, whether by renewal or otherwise,
being repayments- (Amended L.N. 413 of 1987)
(i) which will fall due within 1 month;
(ii) in respect of which the institution has no reason to expect any
default; and
(iii) which are not otherwise taken into account in calculating the
liquefiable assets of the institution;
(d) the amounts that the institution can realize within 1 month (after
deduction of the costs of such realization) for such of its following
assets as are available to meet any or all of its qualifying liabilities-
(i) export bills maturing within 6 months, or payable after sight, and
discountable in Hong Kong dollars or in a currency freely convertible into
Hong Kong dollars;
(ii) securities that were issued, or are the subject of any guarantee or
indemnity given, by the Government or by any government approved by the
Monetary Authority for the purposes of this subparagraph; (Amended 82 of
1992 s. 25)
(iii) other bills, certificates, notes, paper or debt securities which-
(A) are negotiable;
(B) have a remaining term to maturity of not more than 10 years; and
(C) are denominated and traded in Hong Kong dollars or in a currency
freely convertible into Hong Kong dollars, except for any that are issued
by a person or government specified for the purposes of this sub-paragraph
by the Monetary Authority by notice in writing served upon the authorized
institution; (Amended 82 of 1992 s. 25)
(iv) gold.
4. The qualifying liabilities of an authorized institution shall be the
sum, calculated in Hong Kong dollars of-
(a) the amount, if any, by which the total one-month liabilities of
relevant banks to the authorized institution are exceeded by its total
one-month liabilities to relevant banks; and (Amended L.H. 413 of 1987)
(b) the total of its other one-month liabilities.
FIFTH SCHEDULE
[ss. 92 (5) (c) & (7) & 135 (3)]
REQUIREMENTS APPLICABLE TO PRESCRIBED ADVERTISEMENTS
1. Interpretation
(1) In this Schedule-
"deposit-taker", in relation to a prescribed advertisement, means the
person with whom the deposits which are invited by the advertisement are
to be made;
"full name", in relation to a person, means the name under which that
person carries on business and, if different and if that person is a body
corporate, its corporate name;
"liabilities" includes provisions where such provisions have not been
deducted from the value of assets.
(2) A reference in this Schedule to the payment of interest in respect
of a deposit includes a reference to the payment of any premium in respect
of the deposit, and to the crediting of interest to the deposit so as to
constitute an accretion to the principal.
(3) For the purposes of this Schedule, a prescribed advertisement which
contains information which is intended or might reasonably be presumed to
be intended to lead directly or indirectly to the making of a deposit
shall be treated as if it contained an invitation to make a deposit, and
references to an invitation to make a deposit shall be construed
accordingly.
2. Warning
Every prescribed advertisement shall contain a prominent warning to the
effect that the deposit-taker is not an authorized institution within the
meaning of this Ordinance and is therefore not subject to the supervision
of the Monetary Authority. (Amended 82 of 1992 s. 25)
3. General requirements for prescribed advertisements
Every prescribed advertisement shall state-
(a) the full name of the deposit-taker;
(b) the country or territory in which the deposit-taker's principal
place of business is situated, described as such; and
(c) if the deposit-taker is a body corporate, the country or territory
in which it is incorporated, described as such, unless this is the same as
the country or territory referred to in subparagraph (b).
4. Assets and liabilities
(1) Every prescribed advertisement shall state the amount of the paid-up
capital and reserves, described as such, of the deposit-taker (if a body
corporate) or the amount of the total assets less liabilities, described
as such, of the deposit-taker (if a person other than a body corporate).
(2) Where a prescribed advertisement contains any reference to the
amount of the assets of the deposit-taker, it shall state the total amount
of the deposit-taker's liabilities, described as such, which statement
shall be not less prominent than such reference.
(3) Subparagraphs (1) and (2) shall be treated as complied with if the
prescribed advertisement states that the amount of any assets or paid-up
capital and reserves required to be stated exceeds an amount specified in
the advertisement or that the amount of any liabilities required to be
stated does not exceed an amount so specified.
(4) A prescribed advertisement shall not contain any reference to the
assets or liabilities of any person other than the deposit-taker.
5. Deposit protection arrangements
A prescribed advertisement shall not state or imply that the deposits
which are invited or their repayment, or interest or the payment of
interest in respect of them, will be guaranteed, secured, insured, or the
subject of any other form of protection, unless it states-
(a) the form of the protection;
(b) the extent of the protection; and
(c) the full name of the person who will be liable to meet any claim by
the depositor by virtue of the arrangements conferring the protection.
6. Interest
(1) This paragraph applies to a prescribed advertisement which specifies
the rate at which interest will be payable in respect of the deposits
which are invited.
(2) Every prescribed advertisement to which this paragraph applies shall
state-
(a) the minimum amount, if any, which must be deposited to earn that
rate of interest;
(b) the period of time, if any, during which no interest will be
payable;
(c) the minimum period of time, if any, during which a deposit must be
retained by the deposit-taker in order to earn that rate of interest;
(d) the minimum period of notice, if any, which must be given before
repayment may be required of a deposit earning that rate of interest; and
(e) the intervals at which the interest will be paid.
(3) If the rate of interest which is specified is not an annual rate of
simple interest, the prescribed advertisement shall state the basis on
which the rate will be calculated.
(4) If the rate of interest which is specified may be varied during the
period for which the deposit will be held this shall be stated in the
prescribed advertisement.
(5) If interest will or may not be paid in full at the rate which is
specified, this shall be stated in the prescribed advertisement, and the
advertisement shall state the nature and the amount of or rate of any
deductions which will or may be made from the interest before payment.
(6) If the rate of interest which is specified is or may not be the rate
at which interest will be payable in respect of the deposits on the date
on which the prescribed advertisement is issued, this shall be stated in
the advertisement, and the advertisement shall state the date on which
interest was payable at the rate which is specified, such date being as
close as is reasonably practicable to the date on which the advertisement
is issued.
(7) If the prescribed advertisement specifies more than one rate of
interest payable in respect of deposits of a particular amount, the
advertisement shall contain the information required by any of
subparagraphs (2) to (6) in relation to each such rate. (8) Where
different rates of interest apply to deposits of different amounts, the
prescribed advertisement shall contain the information required by any of
subparagraphs (2) to (6) in relation to each such rate.
7. Currency
Every prescribed advertisement shall state the currency in which the
deposits are to be made.
8. Supplementary provisions
(1) Subject to subparagraph (2), the matters required by this Schedule
to be included in a prescribed advertisement shall be shown clearly and
legibly or, in the case of an advertisement by way of sound broadcasting,
spoken clearly.
(2) In the case of a prescribed advertisement by way of television or
exhibition or cinematographic film, the matters required by this Schedule
to be included shall be shown clearly and legibly or spoken clearly.
(Fifth Schedule replaced 95 of 1991 s. 53)
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