Guarantee on bank deposits temporary, says Joseph Yam
Hong Kong Monetary Authority chief executive Joseph Yam Chi-kwong said the blanket guarantee on all bank deposits in Hong Kong announced on Tuesday was a temporary measure applied at a delicate time when confidence in the banking system was threatened by the global financial crisis. 'Prevention is better than cure,' Mr Yam wrote in his weekly newsletter on the authority's website. He said the blanket guarantee might distort the banking system and there would be extra supervision of some areas of the business. The probability of a bank failure in Hong Kong was very low and in the unlikely event that there was one, the probability of the bank being insolvent was low. If the government guaranteed all deposits using the assets of the Exchange Fund, then in the event of a bank failure the shortfall of assets over deposit liabilities would be small, he said.
Standard Chartered cuts GDP forecast for this year
Standard Chartered Bank has revised down its forecast for Hong Kong's GDP growth this year to 3.7 per cent from 4.6 per cent, and cut its 2009 forecast to 2.3 per cent from 5 per cent previously. The bank cited the gloomy outlook for exports and investment, and the fact domestic consumption appeared less likely to take up the slack. 'There is a genuine risk, in our view, that the pendulum could stay at the extreme end of pessimism for longer, as the financial crisis in the west still has some ways to go,' the bank said. 'Given tighter credit and reduced confidence, we are now forecasting a deeper and longer recession in the US, as well as slower growth in Hong Kong.'
U-Right staff to get owed wages
Staff of garment business U-Right who lost their jobs after it went into liquidation have been promised their unpaid wages, commissions and severance pay by November 3. Staff staged a rally at One Pacific Place as representatives met liquidator Deloitte Touche Tohmatsu. U-Right reportedly owed HK$1.2 billion to 18 banks and financial institutions. It had 500 staff and 600 shops in the city and on the mainland.