Follow-up actions to be taken by the Administration
According to the Financial Institutions (Resolution) Ordinance (Cap. 628) (“FIRO”), there are five stabilization options that a resolution authority may apply to a within scope financial institution in resolving the institution. These options are transfer to a purchaser, transfer to a bridge institution, transfer to an asset management vehicle, bail-in, and transfer to a temporary public ownership company.
The Administration was requested to provide supplementary information on:
(a) how deposits, in particular the protected deposits as defined under section 2(1) of the Deposit Protection Scheme Ordinance (Cap. 581) (“DPSO”), would be protected under the resolution regime, including whether the deposits, after transferring to a bridge institution, an asset management vehicle or a temporary public ownership company could still be protected by DPSO (the Administration was requested to provide the relevant provisions in FIRO and DPSO in its response); and
(b) the Administration’s response to members’ views on the need to introduce amendments to DPSO to explicitly provide for the protection of deposits maintained by a bridge institution, an asset management vehicle or a temporary public ownership company, when such companies became non-viable.
Invitation of views
Members considered it not necessary for the Subcommittee to meet with deputations to receive views on the Financial Institutions (Resolution) (Protected Arrangements) Regulation and the Financial Institutions (Resolution) Ordinance (Commencement) Notice 2017 (“the two pieces of subsidiary legislation”).
Legislative timetable and way forward
The Chairman said that the Subcommittee had completed examination of the provisions of the two pieces of subsidiary legislation and would not propose any amendment to them. The Administration would provide written response as requested above as soon as possible. If members did not have views on the written response, no further meeting would be held.
The Subcommittee noted that the scrutiny period of the two pieces of subsidiary legislation would expire at the Council meeting of 14 June 2017. To allow sufficient time for the Subcommittee to report its deliberations to the House Committee, members agreed that the Chairman would move a motion at the Council meeting of 7 June 2017 to extend the scrutiny period to the Council meeting of 5 July 2017. Members noted that, upon extension of the scrutiny period, the deadline for giving notice of motion to amend the two pieces of subsidiary legislation would be 27 June 2017. The Chairman would report the deliberations of the Subcommittee to the House Committee at its meeting on 23 June 2017.