NEWS RELEASE
The Hong Kong Monetary Authority (HKMA) today (17 September 1999) relaxed the one-building condition attached to the licences of foreign banks. From now on foreign banks are allowed to maintain offices in a maximum of three separate buildings. The current restriction on the number of regional and back offices that foreign banks can maintain is also lifted at the same time.
"This represents the second step in the implementation of the package of policy initiatives to reform the banking sector, following the clarification of the HKMA's role as the lender of last resort in June", said Mr David Carse, Deputy Chief Executive of the HKMA.
In response to the Banking Sector Consultancy Study, the HKMA announced a three-year programme to reform the banking sector in July 1999. The main objectives of this programme are to raise the level of competitiveness of the banking industry and to enhance the safety and soundness of the banking system.
Mr Carse added that, "the three-building condition, as it is now called, will allow foreign banks greater flexibility to locate their operations in a cost-effective way. Relaxation of this policy will also enhance Hong Kong's reputation as a free and open international financial centre."
The one-branch policy applies to overseas-incorporated banks authorised in and after 1978 and to overseas-incorporated restricted licence banks authorised in and after 1990. To effect the relaxation, the Monetary Authority has issued a notice under section 16(5) of the Banking Ordinance to the relevant banks and restricted licence banks. In addition, the guideline on activities that can be conducted at regional offices and back offices by overseas-incorporated institutions has also been revised.
Mr Carse said, "With the advent of increasingly advanced electronic banking services, the relevance of this twenty-year policy will be reduced gradually. Nevertheless, the HKMA will closely monitor the impact of this initial relaxation on competition in the banking sector. Further relaxation will be considered in the first quarter of 2001 upon a review at that time."
Hong Kong Monetary Authority
17 September 1999
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