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
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.
EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
EC Mandates ESAs to Propose Amendments to SFDR Technical Standards
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
EBA Examines Supervisory Practices, Issues Deposits Reporting Template
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
SNB Updates NSFR Forms and FINMA Consults on Operational Risk Circular
The Swiss National Bank (SNB) published Version 1.2 of the reporting forms (NSFR_G and NSFR_P) on the net stable funding ratio (NSFR) of banks, along with the associated documentation.
US Agency Publications Address Basel, Reporting, and CECL Developments
The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances
