On 13 July 2023, the Hong Kong Deposit Protection Board issued a consultation paper (“Consultation Paper”) on some proposed enhancements to the Deposit Protection Scheme (“DPS”). The Consultation Paper contains a number of policy recommendations on enhancing protection of depositors in Hong Kong, following a comprehensive review initiated in 2021. The DPS protects the deposits of both personal and corporate depositors held with licensed banks in Hong Kong (but not with the other types of Authorized Institutions (“AIs”) – deposit taking companies and restricted license banks). It does not protect the deposits of AIs, foreign banks or persons/companies related to a DPS scheme member.
One of the key enhancements is to increase the protection limit from the current HK$500,000 to HK$800,000 per depositor. Another key enhancement relates to the merger of licensed banks which are both scheme members of the DPS. In cases where the depositors have deposits with more than one scheme member which are in the process of merging, each affected depositor will be entitled to compensation in respect of his/her protected deposits up to HK$800,000 with each relevant scheme member during a grace period of six months following the bank merger, as if the merger had not occurred.
According to the current legislative timetable of the Financial Services and the Treasury Bureau, it is expected that the amendment bill will be submitted to the Legislative Council for scrutiny in the first quarter of 2024, with the aim of implementing the final proposals regarding the DPS enhancements by early 2025.
The Consultation Paper is available here.
