20 May 2004

Dear Sir / Madam,

Return of Renminbi (RMB) Business Activities

I refer to the letter of 11 March 2004 from Mr Y K Choi regarding the Return of RMB Business Activities (MA(BS)16). Based on our experiences with the first two (i.e. February and March) returns, we have made some minor changes to the return. In summary, we have introduced an item of "Balancing figure" under the items of "Other liabilities", "Other assets" and "Forward positions" (of "Off-balance sheet items") under Part A of the return.

The changes are to provide further breakdown of the three aforesaid items into "Actual amount" and "Balancing figure" to facilitate our analysis. Given that the RMB return is similar to an RMB-currency ledger, our existing validation rules specify that any excess amount of RMB assets will be balanced off by "Other liabilities" while any excess of RMB liabilities will be balanced off by "Other assets". The situation would therefore be complicated if banks have certain RMB assets or liabilities not related to the personal RMB business but reportable under the return, when the relevant balancing figure under either side would result in an artificial inflation of the RMB-ledger. The reported figures for "Forward positions" are subject to the same validation rules, thus resulting in the same problem. The addition of further breakdown figures in the revised return will therefore facilitate our analyses of the actual activities undertaken by banks.

The above revisions will be incorporated to the permanent STET template while the Completion Instructions of the return will be updated for delivery to banks at the same time with the permanent template, tentatively scheduled for early July 2004. In the meantime, the modified temporary Excel template has been delivered separately to your bank via our STET system. Your bank should start using this revised template for reporting the return for the position as at end of April 2004. Should there be any questions about this letter or the modified template, please feel free to contact Mr Thomas Leung (Tel: 2878-1609) or Mr Si-Chun Lam (Tel: 2878-1880).

Yours faithfully,

Arthur Yuen
for Monetary Authority