President,
I move the Second Reading of the Bank of Communications (Hong Kong) Limited (Merger) Bill
(“the Bill”). The Bill seeks to effect the merger of the retail banking business and private banking business of the Hong Kong Branch of Bank of Communications Co., Ltd. (“Bank of Communications”) in Hong Kong into Bank of Communications (Hong Kong) Limited (“Bank of Communications (HongKong)”).
At present, the Hong Kong business of Bank of Communications is operated through its Hong Kong branch. After the merger, Bank of Communications (Hong Kong) will take over the retail banking business and private banking business of the Hong Kong Branch, with a view to further localizing the operation and governance structure of the businesses concerned.
Bank of Communications (Hong Kong) is a wholly-owned subsidiary of Bank of Communications. It was incorporated in Hong Kong in 2014 and was granted a bank licence by the Hong Kong Monetary Authority in September 2015.
The Bill is basically the same as the Bank of Communications (Hong Kong) Limited (Merger) Bill introduced by Mr NG Leung-sing, a Member of the Fifth Legislative Council representing the finance sector. The latter bill was first discussed in the relevant panel of the Legislative Council in July 2015, and a Bills Committee was formed in the last legislative session from its scrutiny.
Various issues including the capital adequacy ratio of and property and liabilities to be transferred to Bank of Communications (Hong Kong) were thoroughly discussed. The Bills Committee also discussed in detail the protection of customers’ interests and employees’ benefits. The bill finally lapsed as it was not scrutinized by the Council before the prorogation of the Fifth Legislative Council. In the current term, I have relaunched the legislative process of the Bill. The Bill was submitted to the Panel on Financial Affairs for discussion at its meeting on 5 December 2016. Regarding the merger, members raised at that time some questions and comments, each of which was then replied to by Bank of Communications and its team of advisers. They indicated that the merger in question followed subsidiarization, a global megatrend in the industry. In addition, as Bank of Communications (Hong Kong) is incorporated locally, it is under the direct supervision of the financial regulatory regime in Hong Kong and this will hopefully further enhance its internal governance and the operational transparency.
Furthermore, as a locally incorporated bank, Bank of Communications (Hong Kong) will primarily operate retail banking and private banking businesses in Hong Kong. Its operation will come closer to its service targets, and will be able to provide more premium and targeted services to its customers. The merger will also help implement the strategy of Bank of Communications to make Hong Kong its focus of development.
In respect of implementation, Bank of Communications will strive to minimize the disruption to the operations of the Bank and the impact on customers in the process of the merger. Customers generally do not need to sign any new documentations. Bank of Communications also pledges that all the employees who agree to be transferred to Bank of Communications (Hong Kong) will be retained. Their accrued benefits, including annual leave and long service leave, will remain unchanged.
President, more than 20 cases of bank merger have been effected via similar bills over the past 30 years. I believe that the Bill is not controversial.
And it aligns with the development trend of the banking industry in Hong Kong and meets the policy objectives on the regulation of the banking industry in Hong Kong. The enactment of legislation to effecting the merger is a highly open and transparent means which will be more easily acceptable to customers, third parties and the community at large.
For the reasons above, I have pleasure to recommend the Bill to this Council.
With these remarks,
President, I introduce the Bill. Thank you.