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HKMA guidelines restrict virtual playing field to existing lenders

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The Hong Kong Monetary Authority (HKMA) has brought emerging virtual banks under its supervision.

In a draft of guidelines given to bankers for comment, the HKMA has outlined the principles it would apply in authorising and monitoring on-line banks.

The HKMA said no guidelines would be implemented before the second half of next year.

The most contentious proposal - and which may be difficult to police - is one that would restrict the virtual banking playing field to existing lenders.

In line with authorisation policies for conventional banking operations, the HKMA in the draft said a locally incorporated virtual bank may be set up only by: Upgrading an existing locally incorporated restricted licence bank or deposit-taking company into a virtual bank, or Converting an existing locally incorporated bank into a virtual bank.

The HKMA also proposed that any locally incorporated on-line bank be 'at least 50 per cent owned by a well-established bank or other supervised financial institution in good standing in the financial community and with appropriate experience'.

It said overseas on-line banks wishing to establish in Hong Kong must come from a country with established e-banking regulations.

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