Ted Hisokawa
Aug 05, 2024 12:37
The Hong Kong Financial Authority (HKMA) has immune the conclusions of its folk session at the three-tier banking device, proposing a transition to a two-tier device.
The Hong Kong Financial Authority (HKMA) has introduced the conclusions of its folk session at the evaluation of the three-tier banking device, in step with the HKMA. The session, which started on June 26, 2023, won vast assistance from the banking business, skilled our bodies, and related organizations.
Proposed Transition to Two-Tier Gadget
The HKMA has proposed merging deposit-taking firms (DTCs) into the second-tier establishments, referred to as limited license banks (RLBs). The transition is predicted to be finished inside 5 years, throughout which present DTCs will wish to meet the minimal capital requirement of HK$100 million and the minimal reserve measurement of HK$500,000 to qualify as RLBs.
To facilitate a clean transition, the HKMA has presented a number of measures:
- Current DTCs might be transformed to RLBs with no need to post pristine license programs, equipped they meet the minimal capital requirement throughout the five-year transition duration.
- Transformed RLBs might be allowed to secure and renew or roll over remarkable deposits taken sooner than the improve, as much as the tip of the transition duration, matter to the pre-existing reserve measurement and adulthood necessities of DTCs (HK$100,000 and 3 months, respectively).
Trade Comments and HKMA Reaction
The session won seven submissions from diverse stakeholders. The respondents in most cases supported the proposed adjustments. According to the comments, the HKMA has made changes to streamline the transition procedure and decrease the affect on present DTC shoppers.
HKMA Leading Govt Eddie Yue expressed pleasure with the session’s end result, mentioning, “We are pleased to note the broad support of the respondents for the proposed simplification of the three-tier banking system into a two-tier system. We have carefully considered the suggestions received and adopted them as appropriate. The HKMA will provide guidance to the DTCs in their transition.”
Nearest Steps
Following the e-newsletter of the session conclusions, the HKMA will paintings with related events to organize the vital legislative amendments to put into effect the proposed adjustments. The total Conclusions Paper is to be had at the HKMA website online.
Hong Kong Financial Authority
5 August 2024
Symbol supply: Shutterstock
