HKMA published the frequently asked questions (FAQs) on sale and distribution of debt instruments with loss-absorption features and related products (collectively called “Loss-absorption Products”). The FAQs provide clarification and further guidance to address some enquiries received from the industry. Earlier, in October 2018, HKMA had issued a circular on the sale and distribution of debt instruments with loss-absorption features and related products.
The types of debt instruments that fall within the scope of the October 2018 circular include the following:
- Debt instruments that meet the qualifying criteria to be Additional Tier 1 Capital or Tier 2 Capital under the Banking (Capital) Rules. The same principle applies to debt instruments issued under an equivalent regime of non-Hong Kong jurisdictions (collectively called AT1/T2 debt instruments)
- External loss-absorbing capacity (LAC) debt instruments under the Financial Institutions (Resolution) (Loss-absorbing Capacity Requirements – Banking Sector) Rules and debt instruments issued under a regime of non-Hong Kong jurisdictions, which implements the FSB standards for "total loss-absorbing capacity term sheet.”
Having considered that more time may be needed to further consider the matters clarified in the set of FAQs, HKMA is extending the deadline for:
- Loss-absorption products (except for in-scope collective investment scheme) to September 06, 2019
- In-scope collective investment scheme to December 31, 2019
Keywords: Asia Pacific, Hong Kong, Banking, Securities, Loss-Absorption Products, FAQ, Tier 1 Capital, Tier 2 Capital, TLAC, Resolution, Banking Capital Rules, HKMA
Previous ArticleECB Publishes Risk-Specific Chapters of Guide to Internal Models
Next ArticleEIOPA Appoints Expert Practitioner Panel on PEPP
EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.
FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).
APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.
BCBS and FSB published a report on supervisory issues associated with benchmark transition.
IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.
ESMA updated the reporting manual on the European Single Electronic Format (ESEF).
EBA published a statement on resolution planning in light of the COVID-19 pandemic.
BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework
ECB published a guideline (2020/97), in the Official Journal of European Union, on the definition of materiality threshold for credit obligations past due for less significant institutions.
FED temporarily revised the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes in response to the COVID-19 pandemic.