Hong Kong has passed the eye of the financial storm and the city that has shown remarkable resilience during the previous economic turmoil, will have short-term challenges but the overall economy is still sound and stable, Standard Chartered Bank Chairman Mervyn Davies said.

Hong Kong and Asia as a whole have good savings mentality. "Most Asian banks have strong reserves, and they have learned lessons from the previous financial crisis," Davies said in a press conference yesterday.

A global financial turmoil triggered by US subprime crisis last year led to about 48 percent drop in Hong Kong benchmark index and the SAR's economy expanded 4.2 percent in the second quarter, at the slowest pace in almost five years.

Davies suggested Hong Kong banks should regain trust from the community and it is time for all lenders to review their business models.

"All banks will change fundamentally after this financial crisis; they will think how much capital and liquidity they should have and how the banks should be run," he said.

And as renminbi is tapping the international market, Hong Kong "should do more to integrate with the Pearl River Delta region and make Hong Kong a center of renminbi development market," he said.

Standard Chartered, one of the biggest and note-issuing banks in Hong Kong, said it will not cut jobs as the Asia, Mid-East and Africa-focused lender enjoys robust growth.

However, the lender'shome rival HSBC has cut 1,000 jobs globally in late September due to global financial turmoil.

Davies said Standard Chartered has clear strategy as an emerging markets-focused bank, and it is well capitalized. "I'm very comfortable with our capital condition."

Standard Chartered has continued to make good progress during the third quarter of 2008, the bank said in a statement to Hong Kong stock exchange late last month. It is clear that Asian economic growth is moderating but, in general, the economies remain resilient and their economic growth rates remain well above the rates of growth for markets in the West, the London-based lender said.

The bank said its profits before taxation rose 31 percent to $2.58 billion in the first half this year while its income increased 33 percent to $6.9 billion.

Standard Chartered Bank's Hong Kong-traded shares fell 3.87 percent yesterday to close at HK$124.

(HK Edition 11/05/2008 page2)