SO IT looks like it could be choppy seas ahead as the high street banks compete fiercely for time deposits. With the market now freed up banks are open to decide the rate they will offer consumers on time deposits greater than three-months. Central to the rearguard defence made by the Hong Kong Association of Banks (HKAB) against the Consumer Council report on the subject was that excessive competition for the deposit base would introduce instability with funds migrating from banks offering lower rates to higher rates offered by their competitors. At least one senior banker at one of the territory's largest banks was in I-told-you-so mode yesterday and we can expect similar statements publicly should the market not stabilise quickly. Hang Seng Bank has been particularly aggressive in its pricing although it pulled back recently. This begs the question: should the timetable to deregulate deposits of shorter duration be put on hold? Despite HKAB's wish that it should, the answer must patently be no. After so many years protected from competition both consumers and banks will of course go through an adjustment phase. If some have over-priced themselves then the situation will be short-lived. Hang Seng Bank, which had adopted an aggressive pricing structure, has one of the lowest loan-deposit ratios in town and it is unlikely to pay more than it can afford for too long. The counter-argument is that the real losers will be the small banks which do not have the balance sheet muscle to survive. Given the disproportionate number of banks in the industry it was to be hoped that some consolidation would occur.