HONG KONG MONETARY AUTHORITY Annual Report 1996

HONG KONG MONETARY AUTHORITY

BANKING STABILITY

One of the principal objectives of the HKMA is to preserve the stability of the Hong Kong banking sector and to ensure that the supervisory regime remains fully in line with the highest international standards. To this end, a number of further policy initiatives and legislative changes were introduced during 1996.

OBJECTIVES

The HKMA seeks to establish a regulatory framework which is fully in line with international standards, especially those recommended by the Basle Committee on Banking Supervision. The objective is to devise a prudential supervisory framework to help promote the general stability and efficiency of the banking system, while at the same time providing sufficient flexibility for authorised institutions to take commercial decisions.

ACHIEVEMENTS

OPERATIONAL SUPERVISION

Given the significant increase in work assignments in 1995, the main priorities for 1996 were to maintain work assignments at the 1995 level and continue to monitor risk management systems of authorised institutions active in treasury and derivatives trading. These priorities were met satisfactorily (Table 1).

The HKMA is also responsible for approving senior management of authorised institutions to ensure that these institutions are managed prudently (Table 2).

In 1996, the HKMA dealt with more than 20 complex cases involving weaknesses in the management and internal control systems of the institutions concerned.The HKMA had to exercise its formal powers under the Banking Ordinance on one of these cases in which significant weaknesses were identified in the management and controls of the institution. The use of these powers was designed to ensure that the necessary remedial measures were taken.

Table 1:
HKMA OPERATIONAL SUPERVISION

Table 2:
APPLICATIONS APPROVED TO BECOME CONTROLLERS, DIRECTORS, CHIEF EXECUTIVES AND ALTERNATE CHIEF EXECUTIVES OF AUTHORISED INSTITUTIONS

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