The Deposit Protection Board on Tuesday proposed raising the protection limit of deposits to HK$800,000 in the fourth quarter this year at the earliest to provide a better buffer for depositors while ensuring the stability of banks.

That represents a 60 percent increase from the current cap of HK$500,000, and would raise the deposits covered from 89 percent to 92 percent, above the international standard of 90 percent.

Speaking at a press briefing, Donald Chen, the board’s chief executive, said while some banks had proposed raising the ceiling to HK$1 million, the board believes the HK$800,000 cap is sufficient to protect depositors while not posing a financial burden to banks.

“We think that the level of HK$800,000 strikes the balance between the costs and benefits,” Chen said.

“If you go beyond HK$800,000, then there will be a very substantial increase in the amount of the target fund that we will need to achieve in order to provide adequate protection, and that will increase the amount of costs [from the banks], which will eventually be passed onto depositors,” he added.

Connie Lau, the board’s chairwoman, said the proposed HK$800,000 cap is higher compared with the city’s regional peers such as Japan and Singapore, while lower than that in the US and the UK.

The board now aims to present an amendment bill to the Legislative Council in the coming months before the cap is implemented.

It will then be reviewed after three years, down from five years previously, in the face of global uncertainties on deposit insurance.