The Hong Kong Monetary Authority's announcement of a new bill dealing with banking supervisory issues (due to be introduced into the Legislative Council on the 4th of April), came in the wake of a KPMG report issuing a clean bill of health for the territory's banking sector. In the report issued by the accountancy giant, the earnings of 13 listed banks were shown to have posted an average rise in net profits of 40%, with an average 70% fall in provisions for bad debts.
Partner John Harrison commented that: 'The Hong Kong banking sector is very strong. You can see this from the high capital adequacy ratios', but warned that there might be some new defaults over the coming period as a result of the economic slowdown in both Japanese and American markets. His colleague, Paul Tsang pointed to the rise in internet banking as the most important challenge for the industry in general and the regulatory authorities in particular, and said that it was essential to realise cost savings from this delivery channel as well as other areas.
It is on internet banking (or to be more precise, the supervision of it) that the new Banking Amendment Bill primarily focuses; according to the Authority's press department, the Bill: '…seeks to amend the banking ordinance…to keep the Hong Kong Monetary Authority's (HKMA) supervisory regime abreast of developments in the industry, in particularly those relating to electronic banking.'
Main amendments introduced by the Bill include provisions that enhance the Monetary Authority's oversight of Authorised Institutions (AIs), strengthen the provisions relating to advertising on the internet, update the definition of 'manager' when the term is used to refer to senior executives of AIs, and provide adequate systems of control for the appointment of managers. The deputy chief executive of the HKMA, David Carse said that the provisions have been 'the subject of full consultation with the industry', and promised guidelines as to what the Monetary Authority deems 'adequate systems of control' in the near future.
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