it is a fact that both the number and the value of cross - border mergers and acquisitions is rising and, as mentioned, will continue further ; at least there is absolutely no reason to assume that the rise in cross - border mergers and acquisitions will abate any time soon. a direct result of these cross - border deals is that the share of foreign banks in domestic european markets has increased substantially, from 20 % of total assets in 1999 to 26 % in 2005. there are several catalysts for the internationalization of european financials, most notably their growth opportunities. indeed, international expansion is one of the most attractive growth opportunities for the profitable, capital rich european banks. with the ongoing integration of european financial institutions and markets, the conduct of financial supervision in europe has moved beyond its primarily national orientation. supervisory rules and regulations are progressively internationally harmonized – basel ii is in this respect a leading example. of course, the implementation of these rules is predominantly performed at the level of national supervisors. the practical consequences of this discrepancy are interesting. let us look at, say, an internationally active bank with subsidiaries in ten other eu countries. such a bank has to deal with at least one home supervisor and ten foreign supervisors. although all these supervisors apply the same general, internationally agreed standards, they may impose their own specific requirements, for example with regard to a firm ’ s internal control system. the process of financial integration across europe thus suggests we should keep thinking about whether the model underlying financial supervision in europe remains adequate. given that financial integration and consolidation in europe is desirable and will continue, it is essential that supervisory structures remain viable. i therefore believe that further steps are needed to achieve more convergence of supervisory practices in europe. national supervisors are already moving, albeit slowly, towards more convergence of their supervisory practices. this is supported by the approval procedures for basel ii - model validation under the capital requirements directive, art. 129. however, a single european supervisor should not be considered a panacea for the cross - border challenges being faced by europe ’ s supervisors. i do not need to remind you that many european banks with large cross - border activities have their largest exposures outside the eu – predominantly in north and south america – rather than within the eu. besides, large institutional differences exist between european countries. legal frameworks, deposit guarantee schemes and even aspects of fiscal regimes must be harmonized before substantial integration of supervision can be realized. one can imagine the technical and political complexity of such a

norman t l chan : hong kong as a private banking hub – a regulator ’ s vision speech by mr norman t l chan, chief executive of the hong kong monetary authority, at the hkab – hkib distinguished speaker series and hkib fellowship conferment ceremony, hong kong, 12 june 2012. * * * peter ( wong ), anita ( fung ), patrick ( fung ), julia ( leung ), ashley ( alder ), distinguished guests, ladies and gentlemen, good afternoon. i am most honoured to be conferred a fellowship by the hong kong institute of bankers ( hkib ) and would like to thank hkib for recognising my contributions, which are in effect contributions of the hkma, to the banking sector. the achievements of hong kong ’ s banking industry are attributable to the efforts of many stakeholders. among them is hkib, which has been providing quality education and training to the banking industry for decades. many industry practitioners, and the banking industry as a whole, have benefited from the good work of hkib. on this special occasion, i am also honoured to be invited to speak in hkab - hkib distinguished speaker series. i will be speaking on “ hong kong as a private banking hub – a regulator ’ s vision ”. i have chosen this topic because over the past few months, the hong kong monetary authority ( hkma ), together with the securities and futures commission ( sfc ) and the financial services and the treasury bureau, has been working very closely with the hong kong association of banks ( hkab ) on what hong kong should do to take the private banking industry to the next higher platform. i would like to take this opportunity to share with you my views on the steps hong kong needs to take to develop as the premier private banking hub in asia. to start with, i want to talk about some facts relevant to hong kong ’ s realisation of this aspiration. hong kong ’ s strengths to be a leading private banking centre wealth in asia - pacific is growing exponentially. according to industry research, the region accounted for half of the growth in global wealth from 2010 onwards. in particular, china was the second top contributor to the growth in global wealth after the us. 1 in 2011, there were about 30 million millionaires worldwide. among these, about 20 % were from asia - pacific. 1 this trend is likely to continue. it is estimated that global wealth will rise 50 % further by 2016