Featured Product

    HKMA Revises Policy Module on Systemically Important Banks

    April 23, 2021

    HKMA revised the Supervisory Policy Manual (SPM) module CA-B-2 on systemically important banks. HKMA published the revised module CA-B-2 as a statutory guidance, by notice in the Gazette, under section 7(3) of the Banking Ordinance. The revisions aim to improve the assessment of the complexity of authorized institutions in the domestic systemically important bank (D-SIB) identification process as well as to update various sections of the policy module to reflect recent developments. The completion instructions for the Return of Information for Assessment of Systemically Important Authorized Institutions (MA(BS)24) have also been updated. However, no resulting impact is expected on the regulatory reporting of authorized institutions.

    The SPM module CA-B-2 sets out the assessment methodology of HKMA for identifying systemically important authorized institutions in Hong Kong and for calibrating the level of any higher loss-absorbency capital requirements. The module also sets out other policy and supervisory measures to be applied to authorized institutions that are identified as being systemically important to address the risks they pose. According to the BCBS D-SIB framework, D-SIBs should be assessed in terms of the potential impact of their failure on the reference system. This can be interpreted as a “loss given default” concept rather than a “probability of default” concept. The D-SIB framework in Hong Kong aims to assess the degree to which authorized institutions are systemically important in a domestic context by reference to the financial system and domestic economy in Hong Kong. This means that the assessment focuses on addressing the externalities that the distress or failure of an authorized institution could generate at a local level. The D-SIB assessment is based on the four factors drawn from the BCBS D-SIB framework—size, interconnectedness, substitutability, and complexity. D-SIBs are identified using a two-step approach. The first step is to draw up a preliminary indicative list of D-SIBs based on the quantitative scores calculated using a set of factors or indicators. The second step involves the exercise of supervisory judgment that may serve as a complement to the quantitative assessment process—that is, to refine the preliminary indicative list by either removing or adding authorized institutions to the list.

     

    Keywords: Asia Pacific, Hong Kong, Banking, Regulatory Capital, D-SIB, G-SIB, Supervisory Policy Manual, Banking Ordinance, Systemic Risk, Basel, BCBS, HKMA

    Featured Experts
    Related Articles
    News

    EBA Publishes Standards on Disclosure of Investment Policy Under IFR

    The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).

    October 19, 2021 WebPage Regulatory News
    News

    EBA Updates Filing Rules for Supervisory Reporting

    The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    APRA Finalizes Guidance for New Prudential Standard on Remuneration

    The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.

    October 18, 2021 WebPage Regulatory News
    News

    OCC Updated LIBOR Self-Assessment Tool for Banks

    The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).

    October 18, 2021 WebPage Regulatory News
    News

    TCFD Updates Guidance for Financial Disclosures on Climate Risk

    The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

    October 14, 2021 WebPage Regulatory News
    News

    BCBS Report Examines Progress on Adoption of Basel III Framework

    The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.

    October 14, 2021 WebPage Regulatory News
    News

    ACPR Implements Updates Related to DPM Version 3.1

    The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.

    October 14, 2021 WebPage Regulatory News
    News

    EBA Note Examines Transition Risks of Benchmark Rates

    The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.

    October 14, 2021 WebPage Regulatory News
    News

    OSFI to Communicate Next Steps on Climate Risk Policy in Early 2022

    In a letter to the federally regulated financial institutions and pension plans, the Office of the Superintendent of Financial Institutions (OSFI) published a summary of the feedback received to the January 2021 discussion paper on ways to address climate risks.

    October 12, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7568