H.K. REVIEWS BANKING STRUCTURE, CAPITAL RATIO
The Banking Commission is reviewing
the present three-tier banking system and its newly established
capital adequacy ratio, banking commissioner Robert Fell said.
    He told a news conference his office has had talks with the
Bank of England and the U.S. Federal Reserve Board on
risk-based capital ratios, following an agreement on such
standards between the two central banks early this year.
    The Bank of England and the Fed are trying to persuade the
Bank of Japan and European central banks to accept their
standards.
    "We welcome international standards," Fell said. "It means a
level playing field for all."
    Under a new banking rule that came into effect last year,
banks in Hong Kong are given a two-year grace period to meet a
five pct capital adequacy requirement.
    "The difference between us (Hong Kong and the U.K.) is
really not that great," he said.
    Fell said the majority of banks are comfortable with the
required capital ratio, though some are under-capitalised.
    Some banks, mostly Japanese, want a lower capital ratio
because of the special nature of their business, mainly
offshore banking operations. These institutions have proposed
the creation of a limited service bank category.
    Financial institutions in Hong Kong are now classified into
three types -- banks, registered and licensed deposit-taking
companies.
    Fell said the Commission is reviewing the three-tier
structure in light of the possible changes in capital ratio and
the growing trend towards securitisation of debt.
    Fell said the Commission is also studying a set of
guidelines on loan loss provisions with the help of the Society
of Accountants.
    Other planned guidelines relate to securitisation of debt
and business that banks and deposit taking companies can
conduct.
 REUTER
