An inquiry has been ordered into the loss of safety deposit boxes during renovations to the Mei Foo branch of DBS Bank.

The Monetary Authority will take into account the outcome of the investigation in determining what, if any, further supervisory action may be warranted.

The investigation is to cover both the incident itself and any implications the case may have for the operation and control of the bank's safe deposit boxes generally and include any remedial actions that may be necessary in the light of the lessons learned.

Compensation plans announced

The bank today announced its plans for compensating customers who have suffered losses as a result of the destruction of the safe deposit boxes, including a one-off ex-gratia payment to be made to all affected customers in addition to the full settlement of claims.

The authority expects the bank to carry out its plans for arranging full and final settlement of claims as fast as possible, adding that satisfaction of legitimate customer claims for damage and reimbursement for losses must be its first priority.

It said Hong Kong's banks must have in place a sound and effective system for safeguarding customer interests and managing the risks arising from business operations.

The authority backs the Association of Banks' plan to discuss the question of how industry standards relating to safe deposit box operations might be improved.

Noting wrong with guidelines

Monetary Authority Chief Executive Joseph Yam said the body attached great importance to the issue and will investigate the case.

Noting the incident will affect the relationship between the bank and its customers, Mr Yam stressed there is noting wrong with the related guidelines issued by the authority.

Financial Secretary Henry Tang described the incident as serious and said the Government is surprised by it. He urged the bank to deal with subsequent complaints as soon as possible.

"According to the bank's code of practice, if there are any acts of omission of error, then they will have to offer fair compensation," he said.

Noting it was an isolated incident, Mr Tang said the case will not affect Hong Kong's role as an international financial centre.