HKMA requests consultation on banking restructure


The Hong Kong Monetary Authority (HKMA) has opened for consultation a paper reviewing the nation’s current three-tier banking system “to ensure it remains fit for purpose”.

The current three-tier structure of Hong Kong’s banking system, which has been in place for 40 years, involves licensed banks (LBs), restricted license banks (RLBs) and deposit-taking companies (DTCs), in an effort to balance the flexibility of market entry and protection of smaller depositors.

In the consultation paper, the HKMA proposes to restructure the system into two tiers and intends to:

  • Keep LBs as first-tier institutions, but merge DTCs into the second-tier institutions and call them all RLBs;
  • Keep the requirements on second-tier institutions the same, including the minimum capital requirement of HK$100 million, the minimum deposit size requirement of HK$500,000 and no restriction on deposit maturity; and
  • Put in place a transition period of five years for current DTCs to upgrade to second-tier institutions (RLBs) or first-tier institutions (LBs).

“The review aims to simplify the structure of Hong Kong’s banking system, enhancing its vital role in strengthening Hong Kong’s status as an international financial centre, and to revitalise institutions in the category of deposit-taking companies and enhance their flexibility and efficiency in conducting business and meeting customers’ needs,” Chief Executive of the HKMA, Eddie Yue, said.