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Banking Regulation in the Territory: A New Era
In a move to strengthen financial stability and consumer protection, the Commissioner has introduced new regulations governing the banking sector in the Territory.
Revoke Licences with Cause
Under the new regulations, the Commissioner has the power to revoke a licence at any time if a bank contravenes the Ordinance or fails to comply with its conditions. This includes instances where a bank operates detrimentally to the public interest, its depositors, or creditors, or has ceased to carry on banking business in the Territory.
Notice and Opportunity to Object
Before revoking a licence, the Commissioner must provide written notice to the bank specifying the grounds for revocation and afford it an opportunity to submit objections. The bank will then be advised of the decision made by the Commissioner.
Minimum Capital Requirement
A new minimum capital requirement has been introduced, requiring licensed banks to have an aggregate of £5 million in cash and unimpaired reserves. This aims to ensure that banks have sufficient financial resources to meet their obligations and maintain stability in the banking system.
Conditions of Licences
Licence conditions may include:
- Restrictions on deposit acceptance
- Credit granting
- Investment activities
- Places where a bank can operate
- Classes of persons it can solicit deposits from
The Commissioner may also specify conditions related to these areas.
Duration of Licences
A licence will remain in force until its specified duration expires, unless surrendered by the licensee or revoked by the Commissioner.
Variation of Licences
The Commissioner may vary a licence at any time, amending, adding, or revoking conditions. Licensed banks will be given reasonable opportunity to make representations on proposed variations.
Restriction on Use of Title “Bank”
Only licensed banks can use the title “bank” or its derivatives in their business descriptions or titles. Associations of banks or bank employees formed for common interests are exempt from this restriction.
Returns and Examinations
Licensed banks must submit annual returns to the Commissioner, including:
- Statements of assets and liabilities
- Outstanding unsecured credit facilities
- Customer liabilities
The Commissioner may require further information as necessary for proper understanding of these statements.
Powers of the Commissioner
The Commissioner has the power to:
- Appoint examiners to inspect licensed banks’ books and affairs
- Require a bank to take steps to rectify any detrimental practices or contraventions
Exemptions
The Commissioner may grant exemptions from certain provisions of the Ordinance, subject to conditions and specified circumstances.
Regulations
The Commissioner has been empowered to make regulations necessary for carrying out the provisions of this Ordinance. These regulations will provide further guidance on the implementation of these new banking regulations in the Territory.