18 November 1999

Dear Sir/Madam,

Banking (Amendment) Ordinance 1999

I write further to my letter of 22 July 1999 which informed you of the enactment of the Banking (Amendment) Ordinance ("BAO") 1999 and its major provisions.

I would like to advise you that the BAO 1999, except clauses 6, 11, 12 and 14, will commence operation on 19 November 1999 by way of a notice in the Gazette to be published on the same date.

The main provisions of clauses 6, 11, 12 and 14 are as follows:

1. Clause 6 provides the Monetary Authority ("MA") with a discretionary power to require all authorized institutions ("AIs") or classes of AIs to publish or disclose information relating to their financial affairs, and to specify the disclosure requirements as well as the manner and timing of disclosure by way of subsidiary legislation (section 60A);
   
   
2. Clause 11 is a new requirement for a local AI to seek the MA's prior approval of any major acquisition or investment in a company (including establishment of a company) which constitutes 5% or more of the capital base of the AI. This new requirement may be applied to an institution on a solo, consolidated or both bases (section 87A). Clause 14 is the appeal provision in relation to clause 11; and
   
   
3. Clause 12 removes the restriction on the MA to disclose individual customers' information to overseas supervisory authorities. Instead, the MA would be empowered to attach conditions to any disclosures made under section 121 that the MA's consent would be required for any onward transmission of such information. Such conditions would be made mandatory in the case of any disclosure of individual customers' information (section 121(3)).

Clauses 11, 12 and 14 will commence operation as soon as practicable subject to the issue of supervisory guidelines and, in the case of clause 6, to the drafting of the subsidiary legislation. As regards the arrangements prior to the commencement of clause 6, the "Best Practice Guide on Financial Disclosure by Authorized Institutions 1999" for local AIs and "Financial Disclosure by Overseas Incorporated Authorized Institutions 1999" for overseas AIs will soon be issued.

I shall notify you again when the exact commencement date of the outstanding sections of the BAO 1999 has been finalised.