Barings' freeze of HK assets prompts review

PUBLISHED : Sunday, 12 March, 1995, 12:00am
UPDATED : Sunday, 12 March, 1995, 12:00am

THE Hong Kong Monetary Authority (HKMA) is reviewing its asset-management operations in the wake of the Barings collapse, which locked up about $3.4 billion worth of the territory's foreign exchange funds.

Julia Leung, of the HKMA, said the authority was reviewing its portfolio, but added funds invested with Barings at the time of the collapse, and subsequently frozen while the bank was sold to Dutch banking group ING, were not in danger.

'The amount invested through Barings was a very, very small proportion of the total reserves,' she said.

'We have been given assurances that these are protected and we will be paid interest on the investments.' According to agencies, Ms Leung said 'only one per cent of the portfolio happened to be with Baring Brothers' - the banking arm of Barings in Hong Kong at the time of the collapse. Ms Leung would not give further details of the asset-management review.

The HKMA manages the bulk of its investments in-house, with only a small slice of funds farmed out to external managers.

Earlier, HKMA deputy chief executive, Andrew Sheng, was reported to have said a small fraction of Hong Kong's foreign reserves placed with Barings could have been at risk because it was in cash.

Barings was ordered to be closed down by the Bank of England on February 27, after one of its traders in Singapore, Nick Leeson, allegedly lost more than US$1 billion through derivatives tradings. Dutch banking group ING, which took over 233-year-old Barings, has promised that no depositors will lose money.

Meanwhile, Baring Securities will resume trading in Hong Kong after the Stock Exchange rubber-stamped its operations under new owner ING.

A meeting of the Stock Exchange' membership committee has approved the new capital and ownership structure of Barings, paving the way for it to begin trading tomorrow.