HKMA Proposes Revisions to Group-Wide Approach to Supervision of Banks
HKMA proposed revisions to the Supervisory Policy Manual module CS-1 on group-wide approach to supervision of locally incorporated authorized institutions. The policy module describes the group-wide approach of HKMA for the supervision of authorized institutions where they form part of a financial or a commercial group, either as the head of the group (in case of a financial group) or as one of the member companies of the group (in case of a financial or a commercial group). The consultation will run until February 01, 2021.
In line with the Core Principles for Effective Banking Supervision, when HKMA supervises an authorized institution, it considers the consolidated risks of that authorized institution's banking group (typically, its immediate holding company, offices, subsidiaries, affiliates, and joint ventures, both domestic and foreign). When the banking group of an authorized institution is part of a wider group, with other group companies (both financial and non-financial) ultimately headed by a common holding company, the risks that could be posed to the authorized institutions by these group companies are also considered. In Hong Kong, the structure of a group of which an authorized institution forms a part generally falls into one or more of the following three categories where an authorized institution
- is heading a financial group with subsidiaries engaging predominately in providing financial services, such as banking, securities, and insurance.
- and its subsidiaries form part of an international banking group or other supervised financial group (one that is headed by a bank or a regulated holding company in an overseas jurisdiction, including through one or more intermediate holding companies above the authorized institution).
- and its subsidiaries are part of a group that is headed by an unregulated holding company, which controls entities engaging in financial activities or a wider range of financial and non-financial activities. This covers groups whose main lines of business are non-financial in nature. Where this is the case, HKMA will generally require the authorized institution within the group to be headed immediately by a locally incorporated holding company, to ensure that the banking (and related) activities of the holding company are subject to relevant prudential standards.
Comment Due Date: February 01, 2021
Keywords: Asia Pacific, Hong Kong, Banking, Supervisory Policy Manual, Banking Supervision, SPM CS-1, Group-Wide Supervision, HKMA
Related Articles
BIS Innovation Hub Sets Out Work Program for 2021
BIS Innovation Hub published the work program for 2021, with focus on suptech and regtech, next-generation financial market infrastructure, central bank digital currencies, open finance, green finance, and cyber security.
EC Plans to Consult on Crisis Management and EDIS Framework Revisions
In an article published by SRB, Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability, and Capital Markets Union, discussed the progress and next steps toward completion of the Banking Union.
EBA Finalizes Remuneration Standards for Investment Firms in EU
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
ECA Recommends Actions to Enhance Resolution Planning for Banks
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE Publishes Key Elements of the 2021 Stress Testing for Banks in UK
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA Proposes Rules on Identity Verification of Depositor Protection
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB Publishes Work Program for 2021
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA Issues Update on Move to New Data Collection Platform
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank Publishes Derivation Rules for Reporting by Banks
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED Revises Capital Planning and Stress Testing Requirements for Banks
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.