THE after-effects of Hongkong's most popular public offering forced banks to borrow record amounts of emergency cash yesterday from the Government to cover their positions at the end of the day.
The Office of the Exchange Fund's discount window lent a total of $2.8 billion to banks in overnight assistance against collateral, the largest one-day direct transfusion of funds since the window was introduced in early June last year.
''If you have large amounts of money moving around in the system, it's a bit like musical chairs,'' said Mr Joseph Yam Chi-Kwong, chief executive designate of the Hongkong Monetary Authority.
''At the end of the day you have banks which find themselves without a chair.'' Meanwhile, a Chinese official said the overwhelming demand for last week's share flotation showed there was a need to reform the system for launching new issues.
A group recently formed to study the monetary and banking implications of new share issues, chaired by Mr Yam, will closely question banks during the next few days on their understanding and management of the risks associated with share financing.
The share subscription for Denway International Holdings, which owns a stake in a car factory in Guangdong, was oversubscribed 658 times, attracting $240 billion in funds for $403 million to be raised from the listing.