Ted Hisokawa
Aug 05, 2024 12:37
The Hong Kong Financial Authority (HKMA) has launched the conclusions of its public session on the three-tier banking system, proposing a transition to a two-tier system.
The Hong Kong Financial Authority (HKMA) has introduced the conclusions of its public session on the overview of the three-tier banking system, in line with the HKMA. The session, which started on June 26, 2023, acquired broad assist from the banking trade, skilled our bodies, and related organizations.
Proposed Transition to Two-Tier System
The HKMA has proposed merging deposit-taking firms (DTCs) into the second-tier establishments, generally known as restricted license banks (RLBs). The transition is predicted to be accomplished inside 5 years, throughout which present DTCs might want to meet the minimal capital requirement of HK$100 million and the minimal deposit dimension of HK$500,000 to qualify as RLBs.
To facilitate a easy transition, the HKMA has launched a number of measures:
Present DTCs might be transformed to RLBs with no need to submit new license purposes, supplied they meet the minimal capital requirement throughout the five-year transition interval.
Transformed RLBs might be allowed to carry and renew or roll over excellent deposits taken earlier than the improve, as much as the tip of the transition interval, topic to the pre-existing deposit dimension and maturity necessities of DTCs (HK$100,000 and three months, respectively).
Trade Suggestions and HKMA Response
The session acquired seven submissions from varied stakeholders. The respondents usually supported the proposed adjustments. In response to the suggestions, the HKMA has made changes to streamline the transition course of and decrease the influence on present DTC clients.
HKMA Chief Govt Eddie Yue expressed satisfaction with the session’s consequence, stating, “We’re happy to notice the broad assist of the respondents for the proposed simplification of the three-tier banking system right into a two-tier system. We’ve got fastidiously thought-about the recommendations acquired and adopted them as applicable. The HKMA will present steering to the DTCs of their transition.”
Subsequent Steps
Following the publication of the session conclusions, the HKMA will work with related events to organize the required legislative amendments to implement the proposed adjustments. The total Conclusions Paper is obtainable on the HKMA web site.
Hong Kong Financial Authority5 August 2024
Picture supply: Shutterstock
