The Hong Kong Special Administrative Region government has welcomed the passage of an amendment bill by the Legislative Council to enhance the Deposit Protection Scheme with the aim to strengthen the protection for depositors, maintain banking stability, and keep up with global standards.

Measures to be taken under the Deposit Protection Scheme (Amendment) Ordinance 2024 include raising the DPS protection limit from HK$500,000 to HK$800,000 (about $64,000 to $102,400), as well as providing enhanced coverage to affected depositors upon a bank merger or acquisition.

Other enhancements to the scheme include refining the levy system to enable the DPS Fund underpinning the scheme to reach the target fund size within a reasonable timeframe under the increased protection limit, the government said in a notification on Wednesday.

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“The Deposit Protection Scheme (Amendment) Ordinance 2024 can help further strengthen the function of the DPS in the financial safety net, enhance depositors' confidence and raise the resilience of the banking sector and the overall stability of the financial system,” said Secretary for Financial Services and the Treasury Christopher Hui Ching-yu.

The enhancements will not only ensure the DPS is in line with international standards, but will also provide better protection for depositors and further contribute to the stability of the banking system in Hong Kong.

Connie Lau, Chairman, Hong Kong Deposit Protection Board

The enhanced scheme will reinforce Hong Kong's position as an international financial center, he added.

According to the government, it will also provide more coverage to affected depositors upon a bank merger or acquisition.

It will require the display of the DPS membership sign on the electronic banking platforms of DPS members and streamline the negative disclosure requirement on non-protected deposit transactions for private banking customers.

The amendment ordinance will be gazetted on July 12 and implemented in two phases.

The first phase, which comes into effect on Oct 1, will cover measures requiring a shorter period of preparatory work, such as the enhancement of the protection limit to HK$800,000. The second phase, which covers other measures, will be implemented on Jan 1, 2025.

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“The enhancements will not only ensure the DPS is in line with international standards, but will also provide better protection for depositors and further contribute to the stability of the banking system in Hong Kong,” Connie Lau Yin-hing, chairman of the Hong Kong Deposit Protection Board, said expressing gratitude to the LegCo for the passage of the enhanced ordinance.

The board will launch a series of promotional campaigns to raise the public awareness of the enhanced DPS, she added.