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Following is the speech by the Acting Secretary for Financial Services, Mrs Rebecca Lai, in moving committee stage amendments to Clause 4 of the Banking (Amendment) Bill 1999 in the Legislative Council today (Wednesday):

Chairman,

I move the deletion of clause 4, as set out in the paper circularized to Members.

Clause 4 of the Bill proposes to add a new section 51B which requires a locally incorporated authorized institution (AI) to seek the Monetary Authority (MA)'s prior approval of any major acquisition or investment in a company which constitutes 5% or more of its capital base.

To rule out the possibility that an AI may make acquisition or investment through its subsidiaries and thus circumvent the requirement of the new provision, we propose to delete clause 4 of the Bill and remove the proposed section 51B to under Part XV of the Banking Ordinance and retitle it as section 87A. If this amendment is approved, the MA shall apply the restriction to AIs, requiring them to seek the MA's prior approval of any acquisition or investment which constitutes 5 % or more of their capital base, on a consolidated or unconsolidated regulatory basis by way of section 79A of the Ordinance.

I move that clause 4 of the Bill be deleted first. Later, I shall move to add the new clause 11A and make consequential amendments to clauses 14 and 17 of the Bill.

Chairman, I beg to move.

End/Wednesday, July 7, 1999

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