HONG Kong banks have agreed to reveal details on bad and doubtful debt provisions and the breakdown of investment securities in their 1995 accounts. Items that have met resistance from bankers, such as details of the actual stock making up inner reserves and segmental information, have yet to be resolved by the Joint Technical Working Group formed by the Hong Kong Monetary Authority (HKMA), the stock exchange and the Securities and Futures Commission (SFC). To speed up the process and allow sufficient time for the preparation of accounts, the HKMA issued a letter to all banks saying that discussion on the 1995 accounts will be split into two phases. The letter listed the items agreed upon by the working group and approved by various industry associations in the first phase of the disclosure process. The straightforward items won ready acceptance from banks. The second phase will cover more complicated details that banks have shown reluctance to divulge, particularly inner reserves and segmental information on profit sources, off-balance-sheet exposures and cash-flow. Subject to further negotiation, recommendations on these items will be announced by the middle of 1995. 'It is not because the information is sensitive, it is because banks find it onerous to provide such details,' said one banker. Among the items to be disclosed in the first phase are details of the movements in provisions for bad and doubtful debts. Data on amounts charged to profit and loss accounts for losses on doubtful advances, amounts written off and amounts recovered, will have to be revealed. Even interest suspended or recovered during the period will have to be accounted for. 'Banks here generally have low bad debt problems, so they are not opposed to the recommendations,' the banker said. Furthermore, investment securities will be broken down into equity and debt securities, with information provided on maturity. With such information, bank investment performance in various markets will become open to scrutiny. To ensure consistency in reporting, all banks will be compelled to state their capital adequacy ratios and liquidity ratios as supplementary financial information. However, the calculation of liquidity ratios will be based on the average liquidity figure for the last month of the financial period. Bankers have shown concern that this method of calculation will allow scope for easy adjustment. The letter is a follow-up to an earlier move by the three regulatory bodies to require more transparent financial accounts in 1994, including detailed breakdowns of income sources and the amount transferred into, or out of, inner reserves. These requirements have been set out in the form of a best-practice guide on financial disclosure given to all banks. The listing rules of the stock exchange have also been amended to accommodate such changes.