|
Deposit Protection in Hong Kong
Depositors in Hong Kong are protected by the Deposit Protection Scheme and, up to the end of 2010, a guarantee offered by the Hong Kong SAR Government' s Exchange Fund.
The Scheme was established by the Hong Kong Deposit Protection Board in accordance with the Deposit Protection Scheme Ordinance for compensating depositors. The purposes of the Deposit Protection Scheme are to protect depositors and help to maintain stability of the banking system in Hong Kong.
On 14 October 2008, the Hong Kong SAR Government announced the use of the Exchange Fund to guarantee repayment of all customer deposits held with all Authorized Institutions in Hong Kong following the principles of the Deposit Protection Scheme. The guarantee took immediate effect and will remain in force until the end of 2010.
At which types of institution are deposits protected?
Deposits held with all Authorized Institutions in Hong Kong,
including Licensed Banks, Restricted Licence Banks
and Deposit-Taking Companies, are protected.
| Deposits at | Protection limit | Protected by |
| Licensed Banks | First HK$100,000 | Hong Kong Deposit Protection Board |
| Above HK$100,000 (Until the end of 2010) | Hong Kong SAR Government's Exchange Fund |
| Restricted Licence Banks and Deposit-Taking Companies | Full amount (Until the end of 2010) |
List of Authorized Institutions under the supervision of the Hong Kong Monetary Authority
Which types of deposit are protected?
Following the principles of the Deposit Protection Scheme, both Hong Kong dollar and foreign currency deposits are protected.
However, certain deposits such as time deposits with a maturity longer than five years, structured deposits (such as foreign currency-linked and equity-linked deposits),
secured deposits (such as deposits used as collateral to secure a banking facility), bearer instruments (such as bearer certificates of deposit) and offshore deposits are not protected.
Other financial products such as bonds, stocks, warrants, mutual funds, unit trusts and insurance policies are also not protected.
Which types of depositor are protected?
Both individuals and companies are protected.
How do you know whether a deposit is protected?
If a financial product is described as a deposit but is not protected by any of the current deposit protection arrangements,
the Authorized Institution offering the product will notify you that the product is not protected either before you open an account for the product or before you decide to purchase the product.
You can find out from the Authorized Institution whether your deposits are covered.
When will compensation be paid?
If an Authorized Institution fails, the Hong Kong Deposit Protection Board will be responsible for making compensation under the Deposit Protection Scheme to the affected depositors, and assist in making compensation under the guarantee of the Exchange Fund.
Affected depositors will be notified when compensation becomes payable.
How is the compensation amount calculated?
The compensation amount is the sum of eligible deposits less any money you owe the Authorized Institution.
Both the principals and the interests of deposits and liabilities will be included in the calculation, and money owed to the bank includes loans (such as credit card balances and mortgage loans), unpaid fees and charges.
For joint deposits, holders of the account are normally deemed to have an equal share in the deposit.
Example (All amounts include principal and interest)
| Depositor |
Details |
Amount (HK$) |
| Eligible deposits |
 |
Mr Lee and Mrs Lee
(a joint account) |
Time Deposit |
160,000 |
Mrs Lee
(a single depositor account) |
Savings Account |
120,000 |
|
| Liabilities to the bank |
|
| Mr Lee |
Personal Loan |
30,000 |
|
| Mr Lee |
|
|
|
Compensation
amount |
160,000/2 – 30,000 |
50,000 |
|
| Mrs Lee |
|
|
|
Compensation
amount |
160,000/2 + 120,000 |
200,000 |
If an Authorized Institution fails, what should depositors do?
Depositors do not need to file claims. Depositors' eligibility for compensation and compensation entitlements will be determined based on records obtained from the failed Authorized Institution.
Eligible depositors will be compensated as soon as possible. If it is deemed necessary, interim payments will be made.
Where do the funds for compensating depositors come from?
The funds for compensating depositors come from a standby credit facility provided by the Exchange Fund.
Related press releases (14 October 2008)
FS' opening statement at press conference to announce measures to safeguard banking stability in HK (Issued by Financial Secretary's Office)
Financial Secretary announces new measures to support confidence in the Hong Kong banking system (Issued by the Hong Kong Monetary Authority)
Information leaflet
|
