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Hong Kong, UK expand deposit protection

Friday 31 December 2010 - by Will Henley

Regulatory authorities in Hong Kong and the United Kingdom have expanded depositor protection schemes put in place at the height of the financial crisis.

Around 90 percent of bank depositors in Hong Kong will be fully protected at a new limit of HK$500,000 (€48,100/$64,300), according to an announcement by the Hong Kong Monetary Authority on Thursday.

The new scheme replaces an expired full deposit guarantee scheme established in October 2008 and now include deposits pledged as security for banking services.

"The full deposit guarantee has functioned effectively to shore up public confidence in Hong Kong's banking system during the global financial crisis," said Financial Secretary John Tsang.

"As the global economy has become more stable, the provision of this special guarantee by the Government should come to an end as originally planned."


Hong Kong Monetary Authority chief executive Norman Chan added that Hong Kong's banking system remains "healthy and robust, with capitalisation well above international standards".

Meanwhile, the UK's Financial Services Authority also announced on Thursday that its deposit compensation scheme would increase from £50,000 to £85,000 from 31 December.

The decision brings the country into line with a €100,000 ($133,500) limit set for on all European Economic Area member states.

"Today's announcement completes a radical overhaul of depositor compensation," said Sheila Nicoll, the FSA's director of conduct policy.

"The need to maintain customer confidence in the banking system is one of the key lessons from the financial crisis."


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