HKMA issued a set of standard disclosure templates (with accompanying explanatory notes) for the loss-absorbing capacity under the Financial Institutions (Resolution) (Loss-Absorbing Capacity Requirements – Banking Sector) Rules (Cap. 628B)—also known as LAC Rules. The templates are to be used by resolution entities and material subsidiaries for making disclosures under Part 6 of the LAC Rules.
The standard templates are modeled on the five relevant templates—namely KM2, CCA, TLAC1, TLAC2, and TLAC3—from the BCBS March 2017 publication on Pillar 3 disclosure requirements. The applicability of these templates has been adjusted to reflect that both resolution entities and material subsidiaries are subject to relevant disclosure obligations under the LAC Rules. The standard templates consist of the following:
- KM2, KM2(A), and KM2(B), reflecting the requirement under rule 47 of the LAC Rules on a resolution entity or a material subsidiary to disclose summary information on its loss-absorbing capacity and, as applicable, that on the non-HK resolution entity
- CCA(A), reflecting the requirement under rule 51 of the LAC Rules on a resolution entity or a material subsidiary to disclose the main features of its regulatory capital instruments and of other non-capital LAC debt instruments
- TLAC1 and TLAC1(A), reflecting the requirement under rule 48 of the LAC Rules on a resolution entity or a material subsidiary to disclose the composition of its loss-absorbing capacity
- TLAC2, reflecting the requirement under rule 50 of the LAC Rules on a material subsidiary to disclose information on its creditor ranking at legal entity level
- TLAC3, reflecting the requirement under rule 49 of the LAC Rules on a resolution entity to disclose information on its creditor ranking at legal entity level
In accordance with the LAC Rules, a requirement on a resolution entity or a material subsidiary to make a quarterly or semi-annual disclosure under Part 6 of the LAC Rules applies in relation to each quarterly reporting period or semi-annual reporting period (as the case requires) of the entity (the period ends at least three months after the classification date of the entity). For the requirement under rule 55(4) of the LAC Rules, a resolution entity or a material subsidiary should lodge a copy of its disclosure statement under the Rules with the Resolution Office of HKMA before it publishes the statement. A resolution entity or a material subsidiary is required to submit a copy of the disclosure statement in Portable Document Format to HKMA by e-mail, within three working days after the first publication or exhibition of such information in Hong Kong, for HKMA to keep it with the register maintained under section 20 of the Banking Ordinance (Cap. 155).
Keywords: Asia Pacific, Hong Kong, Banking, Loss Absorbing Capacity, LAC Rules, Resolution, Pillar 3, TLAC, Reporting, Banking Disclosure, Disclosures, BCBS, HKMA
Previous ArticleBundesbank Publishes Validation Rules for AnaCredit Reporting
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).
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 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 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 published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
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 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 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.
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.
ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.