BASEL II: PROBLEMS AND USAGE

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the last three decades or so have been phenomenal. Is regulated banking more conducive to promotion of banking stability and financial development than laissez-faire or free banking? These are some of the main questions this chapter will address. I hope Hong Kong’s experience can shed light on these banking issues and offer some lessons for other countries. This chapter is organized as follows. The next section gives a brief overview of the structure of Hong Kong’s banking industry and a description of the latest approach to banking regulation and supervision. This is followed by Section <strong>II</strong>I, which evaluates the performance of the banking system with reference to selected financial and economic indicators. The penultimate section discusses some potential regulatory problems confronted by Hong Kong in the foreseeable future before this chapter concludes. 77% A63 6
comply with its regulations. The SFC has the power to disqualify a bank from carrying out securities and futures business. On the other hand, if a bank sets up a subsidiary to conduct securities and futures business, then the SFC will be the front line supervisor of that subsidiary. Similar arrangements also apply to the case of banks’ insurance business. The objective is to allow division of labor, avoid duplication of regulatory activities and raise the efficiency in regulation. Because of limited space and, more importantly, the pivotal role of banks and the important size of the banking sector relative to the whole financial system, we focus here on the regulation and supervision of licensed banks. Though well recognized, it should be reiterated that the efficiency and stability of the banking industry rely on not only banking regulation but also coordination between the various regulators. We shall return to this issue later in this chapter. Since 1981 the Hong Kong banking system has been operating under a three-tier system, under which depository institutions or authorized institutions (AIs) are classified into three categories: licensed banks, restricted licence banks and deposit-taking companies. Licensed banks are legally required to have both registered and paid-up capital of at least HK$150 million. Moreover, each licensed bank has to meet the minimum size requirements of HK$3 billion in customer deposits and HK$4 billion in total assets. Only licensed banks can operate current and savings accounts, and also collect and pay cheques. They can accept deposits of any size and maturity from the public, and are allowed to carry out both retail and wholesale banking businesses. By contrast, restricted licence banks are subject to a lower capital requirement – at least $100 million in both registered and paid-up capital. They are allowed to accept deposits in amounts of HK$500,000 or above without restriction in maturity. They are mainly engaged in wholesale and investment banking. The capital requirement for deposit-taking companies is the lowest among all AIs – only a paid-up capital of HK$2.5 million. However, they are allowed only to take a deposit of at least HK$100,000 and with an original term to maturity of at least three months. At the end of 2008, there were 145 licensed banks, 27 restricted licence banks and 28 deposit-taking companies. In addition, 71 foreign banks had local representative offices. The three categories of AIs together operated a network of over 1,300 branches, and their total customer deposits and total assets were respectively HK$5,904 billion and HK$10,705 billion. The lion shares were held by licensed banks. Because of their importance, the focus of this chapter is on the regulation of licensed banks. The Banking Ordinance provides the legal basis for banking regulation and supervision in Hong Kong. The regulatory framework consists of 41
Page 1 and 2: 0/@39 77. =?
Page 3 and 4: 1
Page 5 and 6: II. Sadvokasova K.G FEATURES OF ORG
Page 7 and 8: 7;A?
Page 9 and 10: The adoption of the Capital Accord
Page 11 and 12: We express our gratitude to our col
Page 13 and 14: In order to create a legal basis fo
Page 15 and 16: HypoVereinsbank (HVB), and Postbank
Page 17 and 18: The savings banks pillar of the Ger
Page 19 and 20: Number of banks 3500 3000 2500 2000
Page 21 and 22: However, the commercial banks secto
Page 23 and 24: 4.2. Supervisory Authorities Wherea
Page 25 and 26: With the amendments to the Banking
Page 27 and 28: The MaRisk contains comprehensive r
Page 29 and 30: Approach in 2008. Therefore, only a
Page 31 and 32: 5.2.1. Receiver Operating Character
Page 33 and 34: 5.2.3. Stochastic Tendency Stochast
Page 35 and 36: anks applying the LDA use the Poiss
Page 37 and 38: 7. Deutsche Bundesbank (2007): The
Page 39: There are several reasons why Hong
Page 43 and 44: eview of an AI’s operations. The
Page 45 and 46: isk management. In addition, the HK
Page 47 and 48: data reveal deteriorated asset qual
Page 49 and 50: the saving deposit rate offered by
Page 51 and 52: Although to Lehman Brothers and AIG
Page 53 and 54: out warnings beforehand. Similarly,
Page 55 and 56: in the implementation of monetary a
Page 57 and 58: (see Jao 1997 for details). Hong Ko
Page 59 and 60: 9. (1999) “Free Banking and Infor
Page 61 and 62: Appendix 1 Performance of the Hong
Page 63 and 64: Timotej Jagric Professor Department
Page 65 and 66: was in the following period dominat
Page 67 and 68: gazette of RS, No. 131/06) allowed
Page 69 and 70: In Slovenia the loan-to-value ratio
Page 71 and 72: lending for needs not related to th
Page 73 and 74: Banking supervisors examines whethe
Page 75 and 76: Slovenian financial system) and lea
Page 77 and 78: Ownership structure of the Slovenia
Page 79 and 80: implementation of the IRB approach
Page 81 and 82: and implement them. Besides direct
Page 83 and 84: Banka Slovenije recommended that ba
Page 85 and 86: domestic enterprises, and would hel
Page 87 and 88: Assoc. Prof. Dr. Okan Veli Şafakli
Page 89 and 90: ’% 16/?/1A3?7@A71@ /;2 :/7; 7;271
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When analyzed at current prices, fr
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Sectoral Distribution of Working Po
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(% A63 ?35B9/A
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)% /@@3@@:3;A
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G.S. Seytkasimov The rector of the
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were instrumental in creating the c
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The operations carried out by these
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The main characteristics of the ban
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in the sphere of accounting and rep
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tasks were determined with orientat
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K.G. Sadvokasova Cand.Econ.Sci., th
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of RK, which it executed till 2004,
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Track record of the changes in the
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But since 2004 with the creation of
Page 119 and 120:
A.A. Mycina The Doctor of Economics
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Data about the banks of the second
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Years Indicators of banks of the se
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cent in 2002 to 31,3 per cent (3,5
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increased nearly twofold - from 521
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The indicators of the ownership cap
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change in the following 2002: the r
Page 133 and 134:
Table 22 continued Figures in billi
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The instability on the global marke
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K.G. Sadvokasova Cand.Econ.Sci., th
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elationship that is affiliated as a
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To strengthen control over the acti
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K.G. Sadvokasova Cand. Econ. Sci.,
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In the IMF document “Quality of f
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1
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Doc. Ing. Frantisek Pavelka CSc. He
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slight overvaluation of their quali
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f) the bank must have a programme o
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From that by approach: BIA 0,92 %,
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2002, banks are also required to ha
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anks (judging by ballansovoy cost m
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• UniCredit Bank CR, a.s.; • Ko
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although a limited degree. From Boh
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Initially the new century for the b
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Table 1 Some indicators of banking
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opinion of supervisors, as well as
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II posts. Market discipline means t
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To determine the credit risk is the
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The borrower who does not have an e
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• financial institutions - primar
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Table 4 Distribution of commercial
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2.4. Evaluation results of the new
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once a year to 30 June on the inter
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Ing.Oldřich Knaifl CSc. Head of Fi
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Internal Ratings-Based Approach to
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Capital Requirement + Expected Loss
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A.O. Yepiphanov Doctor of Economics
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continued to work with the status o
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Among the peculiarities of banking
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Table 1 The main indexes of banking
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Speaking about the correlation of d
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insuring of liquidity and profitabi
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In 2008 under the influence of the
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Index Race of core capital increase
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The indexes of foreign capital pres
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over during the financial crisis, f
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An important moment in the developm
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• the third component-basis “Ma
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215
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According to the data from the tabl
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The requirements as to banking repo
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From the point of view of formation
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Let’s consider in details the pec
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of Ukraine” [20]. This document s
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Table 12 continued № Title of the
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9. Поченчук Г.М. Проб
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Type of the financial reporting Qua
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Appendix 3 The general list of note
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Appendix 4 Assessment of interest r
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№ № of reporting form 15 618 16
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№ of the table 1 2 Appendix 7 Inf
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BASEL II: PROBLEMS AND USAGE

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