Topic

Deposit Insurance

The Mission of DPS

Maintain an effective and efficient Deposit Protection Scheme

The Development of DPS I991 Subsequent bank runs + Bank of Credit and

Commerce International (BCCI) Crisis

1992 : Public consultation Reject

1997: Asian financial crisis Conc

ern in banking system

1998 : HKMA recommend

commissioned a consultancy study

October2000 consultation paper was issued

for public consultation

April 2001 Chief Executive in Council

approved

May 2004 Enactment of the DPS

Ordinance

July 2004 The Hong Kong Deposit

Protection Broad was formed

Objectives Providing a measure of protection to

depositors Contributing to the stability of the banking

system Prevent withdrawal of funds from a bank

will led to a bank failure Minimize the likelihood of a bank failure

caused by rumor provide an orderly means of compensating

depositors

Countries with Explicit ,Limited Deposit Insurance Systems

Deposit insurance is a measure taken bybanks in many countries to protect theirclients’ savings

Africa(4) Asia(10) Europe(32) 　 Middle East(4) Western Hemisphere (17)

FDIC in USA

The Federal Deposit Insurance Corporation

United States government corporation

Glass-Steagall Act of 1933

Provides deposit insurance up to $100,000 per depositor

FDIC in USA

Types of accounts covered

Checking accounts, Negotiable Order of Withdraw, MMDAs

Savings accounts Money market account Certificates of deposit (CDs)

FDIC in USA

Types of accounts not covered

Investments such as US Treasury securities

Stocks, bonds, mutual funds and money markets funds

Losses due to theft or fraud Errors made in your accounts

The graph displays both the number of commercial banks and the number of savings institutions as of June 30 of the current year and each of the previous 15 years.

The chart depicts total assets (expressed in $Billions) of commercial banks and savings institutions as of June 30 of the current year and each of the previous 15 years.

Comments

problems of moral hazard CAMEL ratings (Capital adequacy) 、 (Asset quality) 、 (Management) 、 (Earnings) 、(Liquidity) rewarded for having strong management and good asset quality

moral hazards for insurance can't be eliminated, but can be minimized

Coinsurance attractive conditions and encourage those

depositors including small, large depositors, debtors

Enforce it clearly Let depositors know how the system works Increase system transparency

Assets in banks : liquid assets and inestimable loans

When most depositors request to pay cash, the banking system may go into a fragile stage.

Public know the system clearly, such as interests ,principal

Definition among all banks should be the same

Adverse selection regulate all banks should par

ticipate mandatory

2006 年中期報告Customer loan Customer deposit

Hang Seng $2,665,050,000.00 4,480,970,000.00

Dah Sing 48,540,085,000.00 58,259,426,000.00

Hang Seng 54 %

Dah Sing 83%

FDIC in USA Almost 100% of bank deposits are

insured and only 3 % of US deposit-taking institutions are not member.

Membership of the scheme is part of marketing strategy

DPS in HK Quality of bank management and

regulations Depositors money is not put in to

danger stage government

Group 7

Chung Chun Kwong ,043128 Chung Wing Leung, 043137 Kwong Tik Man, 043147 Ngan Yee Kwan, 043157