Policy Statement & Submission

11 December 2009


Ms Karen Kemp
Executive Director (Banking Policy)
Hong Kong Monetary Authority
55th Floor, Two International Finance Centre
8 Finance Street, Central
Hong Kong


Dear Ms Kemp,

The Hong Kong General Chamber of Commerce is pleased to take this opportunity to respond to the Hong Kong Monetary Authority's consultation on financial sector remuneration. In consultation with our members, we have come to the conclusion that we do not support mandatory remuneration guidelines.

The initial premise, that remuneration practices at large financial institutions were in some way related to the global financial crisis, is unsubstantiated. Such a claim does not take into consideration factors such as deregulation, inadequate oversight, excessively loose monetary policy, massive fiscal deficits, asset bubbles and other direct causes. Moreover, and perhaps much more important, Hong Kong is alone among global business and financial centres in having avoided bank failures and cataclysmic risk management failure.

One of the guiding governance philosophies that has served us so well over the years, one that we strongly endorse and vigorously defend, is that we emphatically oppose regulations simply because other jurisdictions choose to move in a particular direction. Although the Group of Twenty may have recommended that members restrict employer-employee compensation agreements, Hong Kong is neither represented in that group nor typical of its members.

We do not believe that the Banking Ordinance was intended to legitimize governmental micro-management of authorized institutions. Nor do we believe individual or system-wide compensation packages are in any way a threat to the "general stability and effective working of the banking system". The Supervisory Policy Manual module on Corporate Governance of Locally Incorporated Authorized Institutions already imposes adequate obligations on AIs to properly manage their businesses. Any further refinement may be best managed through the on-going rewrite of the Companies Ordinance and, where necessary, through legislative amendment to the Banking Ordinance.

The Chamber strongly supports good corporate governance, and recognizes the responsibility companies and financial institutions have to the community. We do not and cannot support interference in the management of private or publicly listed companies.

Yours sincerely,





Alex Fong
CEO