The Hong Kong Monetary Authority (HKMA) has proposed simplifying the current three-tier banking system in Hong Kong, which has been established for 40 years, by converting it to a two-tier system. The HKMA has released a consultation paper to obtain feedback from the public on the proposed changes. The plan involves merging deposit-taking companies (DTCs) into the second tier, which will be renamed restricted licence banks (RLBs), while licensed banks (LBs) will continue to be the first tier. The minimum capital requirement, minimum deposit size requirement, and deposit maturity restriction for RLBs will remain the same. Existing DTCs will be given five years to upgrade to RLBs or LBs. The purpose of this review is to streamline the banking system in Hong Kong, enhance its position as an international financial hub, and improve the flexibility and efficiency of financial institutions. The public consultation period will end on September 25, 2023, and interested parties can submit their feedback to the HKMA before the deadline.
Consultation Paper on Review of the Three-Tier Banking System: https://www.hkma.gov.hk/media/eng/regulatory-resources/consultations/20230626e1.pdf