HKMA says Hong Kong banking system is sound

A Hong Kong Monetary Authority (HKMA) spokesperson said today (Wednesday) that rumours questioning the stability of the Bank of East Asia (BEA) were unfounded.

"The banking system of Hong Kong is safe and sound. Local banks are well capitalised and highly liquid. Their asset quality is good and their operations have been strong. BEA's capital adequacy and liquidity ratios are well above regulatory requirements," the spokesperson added.

The HKMA has well-established mechanisms, such as the discount window and the lender-of-last-resort arrangement, to meet any requests for liquidity and stands ready to assist banks if they need liquidity support. However, none of them have asked for this so far.

The spokesperson emphasised that depositors of licensed banks in Hong Kong are protected by the Deposit Protection Scheme, which covers deposits up to $100,000.

"Depositors should stay calm and consider carefully before taking any action," the spokesperson said.

For further enquiries, please contact:
Thomas Chan, Senior Manager (Press), at 2878 1480 or
Hing-fung Wong, Manager (Press), at 2878 1802

Hong Kong Monetary Authority
24 September 2008