HKMA published a revised guideline on the authorization of virtual banks, following the completion of a public consultation. HKMA also published a document on consultation conclusions, which contains detailed summary of comments recieved, along the responses of HKMA. The guideline is issued under section 16(10) of the Banking Ordinance and it sets out the principles that HKMA will consider in deciding whether to authorize virtual banks applying to conduct banking business in Hong Kong.
Since HKMA announced its intention to encourage virtual banking in Hong Kong last September, it has received inquiries and indications of interests from over 50 companies. For the companies that have not been able to submit a substantially complete application to HKMA by August 31, 2018, they are most unlikely to be included in the first batch of virtual bank applications to be processed by HKMA. In processing these applications, HKMA will prioritize the applicants that can demonstrate the following:
- They have sufficient financial, technology, and other relevant resources to operate a virtual bank.
- They have a credible and viable business plan that would provide new customer experience and promote financial inclusion and fintech development.
- They have developed, or can develop, an appropriate IT platform to support their business plan.
- They are ready to commence operation soon after a licence is granted.
During the public consultation, HKMA received submissions from 25 respondents, including the Hong Kong Association of Banks, the DTC Association, the Consumer Council, chambers of commerce, an industry association from the fintech community, technology companies, and professional firms. All respondents supported the introduction of virtual banking in Hong Kong. Most of them agreed that virtual banks should be subject to the same supervisory requirements applicable to conventional banks. No respondents raised objection to allowing both financial and non-financial firms to operate a virtual bank in Hong Kong and there was broad support for virtual banks to operate in the form of a locally incorporated entity with no physical branches. A number of respondents requested HKMA to elaborate on some of the principles contained in the guideline. HKMA has taken on board many of these comments and has made suitable changes to the relevant paragraphs in the guideline.
Keywords: Asia Pacific, Hong Kong, Banking, Guideline, Virtual Banks, Fintech, HKMA
Previous ArticleBoE Publishes Draft Banking XBRL Taxonomy Version 3.0.0
EC published the Implementing Regulation 2021/763 that lays down implementing technical standards for supervisory reporting and public disclosure of the minimum requirement for own funds and eligible liabilities (MREL).
EBA published a report that examines the convergence of prudential supervisory practices in 2020 and offers conclusions of the EBA college monitoring activity.
APRA announced the standardization of quarterly reporting due dates for authorized deposit-taking institutions.
The private sector working group of ECB on euro risk-free rates published the recommendations to address events that would trigger fallbacks in the Euro Interbank Offered Rate (EURIBOR)-related contracts, along with the €STR-based EURIBOR fallback rates (rates that could be used if a fallback is triggered).
Bundesbank published a list of "EntryPoints" that are accepted in its reporting system; the list provides taxonomy version and name of the module against each EntryPoint.
EBA published the phase 1 of its reporting framework 3.1, with the technical package covering the new reporting requirements for investment firms (under the implementing technical standards on investment firms reporting).
The Sustainable Finance Taskforce of IOSCO held two roundtables, with global stakeholders, on the IOSCO priorities to enhance the reliability, comparability, and consistency of sustainability-related disclosures and to collect views on the practical implementation of a global system architecture for these disclosures.
Asia Pacific Australia Banking APS 111 Capital Adequacy Regulatory Capital Basel RBNZ APRA
ESMA published the final guidelines on outsourcing to cloud service providers.
EBA published annual data for two key concepts and indicators in the Deposit Guarantee Schemes (DGS) Directive—available financial means and covered deposits.