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Part A - Deposit Protection Scheme
Part B - Hong Kong Deposit Protection Board
Part C - Scheme members
Part D - Level of protection
Part E - Depositors protected
Part F - Financial products protected by the DPS
Part G - Disclosure and Representations
Part H - Compensation
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Part A - Deposit Protection Scheme
Q1. What is a deposit protection scheme?
A1. A deposit protection scheme protects depositors by paying compensation to them in the event of a bank failure. In Hong Kong, the DPS is established under the Deposit Protection Scheme Ordinance (DPS Ordinance). In case a member bank of DPS (a Scheme member) fails, the DPS will pay compensation up to a maximum of HK$500,000 to each depositor of the failed Scheme member.
Q2. What is the objective of introducing the DPS in Hong Kong?
A2. The objective of introducing the DPS is to contribute to the stability of the banking system through the provision of protection to depositors.
Q3. Do other countries have schemes for protecting depositors similar to the DPS in Hong Kong?
A3. Yes. Comparable schemes can be found in most developed countries like the US, the UK, Canada, Singapore and Japan.
Q4. When did the DPS in Hong Kong commence operation?
A4. The DPS in Hong Kong commenced operation on 25 September 2006.
Q5. Who operates the DPS?
A5. The DPS is operated by the Hong Kong Deposit Protection Board. The Board is an independent statutory body established under the DPS Ordinance.
Q6. Do I need to pay for the protection under the DPS?
A6. No, you do not need to pay for the protection under the DPS. The DPS is funded by contributions paid by Scheme members to the Board.
Q7. Will banks pass on the cost of the DPS to depositors?
A7. Whether banks pass on the cost of the DPS to depositors is a commercial decision for them. However, intense competition in the banking sector should limit their ability to do so.
Q8. Do I need to apply for protection under the DPS?
A8. No. You do not need to make any application for protection under the DPS.
Q9. Can I choose not to be protected by the DPS?
A9. No. The DPS protects all eligible depositors in accordance with the DPS Ordinance.
Q10. Is the DPS subsidised by the Government? Does the Government provide any subsidy to the DPS?
A10. No. The DPS is funded by contributions paid by Scheme members.
Q11. What is the size of the DPS Fund? Is it sufficient for paying compensation to depositors when a bank failure occurs?
A11. The target size of the DPS Fund is 0.25% of the aggregate amount of protected deposits in the banking sector. The Board has secured a credit facility from the Exchange Fund for the purpose of paying compensation to depositors in the event of a bank failure. The size of the credit facility is sufficient to cope with the simultaneous failures of two medium-sized banks.
Q12. If the DPS Fund is exhausted due to a bank failure, will the DPS go bankrupt or be wound-up?
A12. No. The Board can require Scheme members to pay additional contributions to replenish the Fund.
Q13. How is the DPS Fund managed?
A13. The DPS Ordinance has set out clear guidance on how the DPS Fund should be managed. The Fund can only be invested in deposits with the Exchange Fund, Exchange Fund Bills, US Treasury Bills, and other investments approved by the Financial Secretary, and exchange rate and interest rate contracts for hedging purpose.
Q14. How frequent does the Board collect contributions from Scheme members?
A14. The Board collects contributions from Scheme members on an annual basis.
Q15. How does the Board determine the contributions payable by individual Scheme members?
A15. The contributions payable by individual Scheme members are determined by the amount of protected deposits held with the Scheme members and the supervisory ratings assigned to them by the HKMA.


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