Hong Kong depositors can rest easier with new rules
- In a confidence-boosting measure, Hong Kong banks will later this year guarantee that HK$800,000 per depositor is fully protected, up from the current HK$500,000
The savings safety net is about to be cast wider to protect Hong Kong depositors in the unlikely event of a bank failure. It is good the government is moving ahead with the proposal at a time when the city is intensely focused on post-pandemic economic recovery.
The change expected to be in place by the fourth quarter of this year will expand coverage to HK$800,000 per depositor. Funded by all city banks, the Deposit Protection Scheme (DPS) was launched in 2006 and initially covered deposits of up to HK$100,000. It was raised to HK$500,000 in 2011.
The Hong Kong Deposit Protection Board said the enhancement is “crucial” if the scheme is to keep up with international best practices.
Board chairman Connie Lau Yin-hing on February 6 said that the 60 per cent increase would ensure the programme “remains effective in contributing to banking stability”.
Deposit protection in the city will soon align with global standards as it covers 92 per cent of all depositors.
The level will be on par with what Britain, Germany and Ireland offer and higher than mainland China’s safety net of 500,000 yuan (HK$550,000) and Singapore’s S$75,000 (HK$435,000). The US covers up to US$250,000.