The fund collects money from the banks ranging from 0.05 per cent to 0.14 per cent of yearly deposits.

He said the board was currently gathering data from banks to see if a review was needed regarding an expansion of the coverage of structured deposits, such as equity and credit line deposits.

The Deposit Protection Scheme insures people's bank deposits of up to HK$100,000 in each bank in case of a collapse. But it does not cover structured, secured or term accounts with a maturity of more than five years.

'We committed to review whether structured deposits should be covered under the scheme when more than 3 per cent of total small depositors held structured deposits,' he said.

In 2005 less than 1 per cent of small depositors, defined as those who have deposits of less than HK$100,000, had structured deposits, the agency said.

Mr Li said more than 80 per cent of account holders were covered by the scheme.

He said total deposits increased more than 10 per cent last year, while protected deposits increased only 3 per cent but he expected the coverage ratio would not change too much.

Total protected deposits and total deposits were HK$452 billion and HK$4.44 trillion, respectively, in October last year.

By July this year Hong Kong's total deposits amounted to HK$5.22 trillion.

Mr Li said that when the fund reaches 0.3 per cent of protected deposits, HK$1.3 billion based on last year's amount of protected deposits, the fee charged to banks would be reduced. Some media have reported that the British government plans to raise the protection ceiling of its insurance scheme after the recent run on Northern Rock deposits.

Mr Li said this development would have no impact on Hong Kong's protection scheme since the plans were structured differently.

However, he said if the coverage ratio fell below 80 per cent, the board would consider whether it needed to increase the protected amount.

He added that a survey of Hong Kong residents showed that 67 per cent were aware of the scheme. The survey showed that public confidence in the banking system and in small- and medium-sized banks had been enhanced.

However, the survey also found that some people thought they could collect the full HK$100,000 limit, even if their deposit was less than that. Some did not know that foreign currency deposits were also protected.

'We will continue to work on strengthening public understanding of the scheme,' he added.

Adding up

HK$1.3 billion of small deposits should be covered by 2011

Amount of Hong Kong residents surveyed who are aware of the deposit protection scheme fund: 67%