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Structure of the Banking System

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Structure of the banking system

Structure of the banking system
Hong Kong’s banking sector comprises three tiers of authorized institutions
(AIs): licensed banks, restricted licence banks and deposit-taking companies.
The main distinction between these three types of AIs lies in the activities they are allowed to conduct under the Banking Ordinance:


Only licensed banks may provide current and savings accounts; accept deposits of any size and maturity from the public, pay or collect cheques; and use the name “bank” without restriction. According to the Deposit
Protection Scheme Ordinance, only licensed banks can, and are required to, join the Scheme as Members



Restricted licence banks, many of which are engaged in wholesale and capital market activities, may only take deposits from the public in amounts of HK$500,000 or above without restriction on maturity



Deposit-taking companies are restricted to taking deposits of
HK$100,000 or above with an original term to maturity of at least three months. These companies are mostly owned by, or otherwise associated with, banks and engage in a range of specialised activities, including consumer and trade finance, and securities business.

An overseas incorporated bank may establish a local representative office in
Hong Kong, but it is not allowed to engage in any banking business and its role is confined mainly to liaison between the bank and its customers in Hong Kong.
The number of AIs fluctuates over time, but in the past decade it has stayed at around 200. Since 2007, total assets of all AIs have exceeded HK$10 trillion.
Detailed statistical information about Hong Kong’s banking sector can be found on the HKMA website.

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