Hong Kong's Financial Secretary John Tsang has this week refuted "unfounded" and "malicious" rumours on the Bank of East Asia's financial stability, saying Hong Kong's banking system is robust with high capital adequacy and ample liquidity.
Mr Tsang said the bank has contacted the police over the claims and warned rumourmongers they face criminal responsibility. He said the bank is financially stable and has sufficient capital to cater to customers.
"The bank does not need any financial assistance from the Monetary Authority," Mr Tsang remarked.
His comments were echoed by Monetary Authority Chief Executive Joseph Yam who also clarified that the bank has no financial problem and its capital adequacy ratio exceeds 14.6%, well above the 8% Basle minimum prescribed in law. The bank's liquidity ratio is nearly 40%, higher than the minimum requirement of 25% specified in the Banking Ordinance.
He urged depositors to stay calm because they are well protected under Hong Kong's banking system and its Deposit Protection Scheme.
"Of course, when there is a financial tsunami in the rest of the world,
particularly in the largest financial market, we will be affected to some extent.
But I don't think Hong Kong's banking system will be affected very much by what
is going on now in the rest of the world because banks have very high capital
adequacy ratio, high liquidity and good asset quality," Mr Yam added.
"In the meantime, there will be volatility in financial markets in Hong
Kong and elsewhere. Depositors and investors should observe these developments,
protect themselves, and manage risks," he concluded.
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