HKMA Keeps Countercyclical Capital Buffer for Banks Unchanged
HKMA announced that the countercyclical capital buffer (CCyB) ratio for banks in Hong Kong remains unchanged at 1.0%. While making this decision, HKMA considered a series of quantitative indicators and qualitative information, including an “indicative buffer guide.” The latest indicative buffer guide, which has been calculated based on data from the second quarter of 2020, signals a CCyB of 2.5%. However, the projection based on all available data suggests that the indicative buffer guide would very likely signal a lower CCyB than this when all relevant data from the third quarter of 2020 will be available. Mr. Eddie Yue of HKMA stated that it is appropriate to keep the CCyB ratio unchanged at this time, as the economic environment in Hong Kong is still uncertain.
In Hong Kong, the CCyB ratio is usually reviewed on a quarterly basis. CCyB is an integral part of the Basel III regulatory capital framework and is being implemented in parallel by Basel Committee member jurisdictions worldwide. The power to implement the CCyB in Hong Kong is provided by the Banking (Capital) Rules, which enable HKMA to announce a CCyB ratio for Hong Kong. The specific CCyB requirement applicable to a given authorized institution is expressed as a percentage of its common equity tier 1 capital to its total risk-weighted assets. The CCyB requirement of each authorized institution may vary, depending on the geographic mix of its private-sector credit exposures and the CCyB applicable in each jurisdiction where it has such exposures.
Keywords: Asia Pacific, Hong Kong, Banking, CCyB, Basel, Regulatory Capital, Macro-Prudential Policy, BCR, HKMA
Featured Experts

María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer

Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.

Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
FSI Brief Examines COVID-Related Adjustments to Bank Stress TestingRelated Articles
HKMA Sets Out Regulatory Treatment for Personal Loan Guarantee Scheme
HKMA has published a circular that sets out the regulatory and reporting treatment for loans that participating authorized institutions may grant to eligible borrowers under the 100% Personal Loan Guarantee Scheme.
ECB Completes Targeted Review of Internal Models of Banks
ECB published the results of the assessment of internal models that banks use to calculate risk-weighted assets for credit, market, and counterparty credit risks.
PRA on Regulatory Treatment of Loans Under Mortgage Guarantee Scheme
PRA published a statement on the regulatory treatment of retail residential mortgage loans under the Mortgage Guarantee Scheme, or MGS.
FCA Consults on Rules and Reporting Forms for Investment Firms Regime
FCA is consulting, via CP21/7, on the second phase of proposed rules to introduce the UK Investment Firm Prudential Regime (IFPR).
HMT and BoE Decide to Explore Central Bank Digital Currency in UK
HM Treasury and BoE announced the joint creation of a Central Bank Digital Currency (CBDC) Taskforce to coordinate the exploration of a potential central bank digital currency in UK.
EIOPA Sets Out Expectations on Use of Climate Risk Scenarios in ORSA
EIOPA published an opinion to set out its expectations on the supervision of the integration of climate change risk scenarios by insurers in their Own Risk and Solvency Assessment (ORSA).
EC Sets Out Standards for MREL Reporting by Competent Authorities
EC published the Implementing Regulation 2021/622 that lays down implementing technical standards for reporting of the minimum requirement for own funds and eligible liabilities (MREL).
BCBS to Advance Work on Suptech, Climate Risk, and Basel Monitoring
BCBS has set out the strategic work priorities, as part of its the work program for 2021-22.
Bundesbank Updates AnaCredit Reporting Requirements
Bundesbank published two circulars on AnaCredit reporting requirements. Circular 27/2021 covers changes to the reporting of branches, additional attributes to be reported for investment funds from August 01, 2021, and updates to the list of international organizations.
PRA Finalizes Supervisory Approach for Non-Systemic Banks in UK
PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.