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515.5995

Guidelines & Circulars

Our Ref.: B1/15C

5 February 2009

The Chief Executive
All Authorized Institutions

Dear Sir/Madam,

Coverage of the Full Deposit Guarantee

Following the announcement of the full deposit guarantee (Guarantee) by the Financial Secretary in October 2008, the HKMA issued in December 2008 a statutory guideline to require all authorized institutions to notify customers of deposits not protected by the Guarantee, including the issuance of a notice before the end of May 2009. Since then, the HKMA has been working closely with the Deposit Protection Board to bring to the attention of the public the coverage of the Guarantee through various channels.

The HKMA noted that public attention to the protection status of their deposits has risen notably after the introduction of the Guarantee, possibly triggered by the unlimited protection offered by the Guarantee. In particular, the possibility of a deposit held and pledged in an integrated account falling outside the protection of the Guarantee has attracted considerable public concern recently. An integrated account generally refers to the offering of a package of services collectively to a customer. The services bundled in the package may include deposit, loan, investment, etc., and the accounts opened for such purposes are usually linked up by an agreement. To help allay public concern, your institution is requested to issue a letter or e-mail, as soon as practicable, to customers maintaining any types of integrated account with a deposit service with your institution to clarify whether any deposits held under the account can become pledged and unprotected. At a minimum, the letter or e-mail should cover:

  • whether any credit facilities is offered under the type of integrated account held by a customer;
  • if a credit facility is offered, whether the facility is offered on a secured or unsecured basis;
  • if a secured credit facility is offered, whether the facility is offered to the customer automatically or the customer has to make a choice to subscribe to the facility and on the amount of deposits pledged for the facility; and
  • that your institution will inform the customer details of the non-protected deposits held by the customer before the end of May 2009 in accordance with the guideline issued by the HKMA.

Your institution is also requested to identify a point of contact in the letter or e-mail for answering customers' enquiries in case of doubt.

In the light of the heightened public attention to the coverage of the full deposit guarantee, the HKMA would like to seek the assistance of your institution to enhance public understanding in this area. Your institution is strongly encouraged to send a copy of the information leaflet on the Deposit Protection Scheme (as attached) to your depositors within the next two months. At the request of the HKMA, the Deposit Protection Board has agreed to supply leaflets to authorized institutions for sending as statement inserts free of charge. If your institution is interested in sending the leaflets to depositors, please fill in the attached reply form to indicate the quantity and specifications of the leaflets required on or before 19 February 2009. The Deposit Protection Board will approach your colleagues to firm up the relevant logistic arrangements and delivery schedule upon receipt of your institution's reply.

If you have any questions, please do not hesitate to contact Mr Raymond Tsai at 2878 1060 or Ms Teresa Lai at 2878 1305.

Yours faithfully,

Nelson Man
Executive Director
(Banking Supervision)

Encl.
Leaflet (PDF file, 2MB)
c.c.
Chairman, The Hong Kong Association of Banks
Chairman, The Deposit-taking Company Association
FSTB
Last revision date: 1 August 2011
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