The Hong Kong Monetary Authority supports further consolidation in the SAR's banking sector and believes the trend will boost the industry's competitiveness.
However, the process need not involve ownership changes if strategic alliances could achieve the same benefits, deputy chief executive David Carse said.
'One of the objectives of a merger is to reduce operating expenses,' Mr Carse said.
'If you can do that [through other forms of co-operation] by sharing the costs of computerisation or the costs of developing new products, that seems to be a very sensible thing to do.' Mr Carse's comments followed news of a possible merger of the 12 banks of the Bank of China Group (BOC) in Hong Kong and the announcement that seven other banks would form an alliance to offer Mandatory Provident Fund services.
He said all consolidation moves should be driven by commercial considerations, based on the judgment of individual banks' management.
Unlike banks in Korea and Thailand, those in Hong Kong in general were still in a reasonably good financial position, Mr Carse said.
He did not think financial or capital strength enhancement would be a significant incentive for bank mergers.
