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HK's Deposit Insurance Scheme Approved in Principle
The Executive Council of the Hong Kong Special Administrative Region (SAR) has given approval in principle to a deposit insurance scheme to protect small depositors in case of bank failure, reported Hong Kong's English newspaper "iMail" Wednesday.
However the scheme is not expected to be implemented before 2002 at the earliest.
Large banks remain opposed to the scheme but the government claims there is broad public support.
The Hong Kong Monetary Authority (HKMA) said 41 of the 59 respondents, who wrote to or met the authority during the public consultation phase, supported the proposal.
David Carse, deputy chief executive of the HKMA, conceded large banks were opposed to the idea, mainly because they feared other banks would take on greater risk and some depositors would be less cautious about selecting their banks.
There also were concerns about costs.
The HKMA said its "preliminary view" was that the scheme should cover all 155 banks licenses in Hong Kong .
Carse said the HKMA was inclined to adopt a coverage cap of 100, 000 HK dollars (12,800 US dollars), which would mean coverage for 84 percent of depositors in Hong Kong.
He added there was scope to bring down the premium paid by banks to eight basis points per annum of covered deposits from the previously planned 10 basis points.
This, however, will require more research and analysis before any commitment can be made, Carse said.
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