Featured Product

    HKMA Revises Policy Module on Systemically Important Banks

    April 23, 2021

    HKMA revised the Supervisory Policy Manual (SPM) module CA-B-2 on systemically important banks. HKMA published the revised module CA-B-2 as a statutory guidance, by notice in the Gazette, under section 7(3) of the Banking Ordinance. The revisions aim to improve the assessment of the complexity of authorized institutions in the domestic systemically important bank (D-SIB) identification process as well as to update various sections of the policy module to reflect recent developments. The completion instructions for the Return of Information for Assessment of Systemically Important Authorized Institutions (MA(BS)24) have also been updated. However, no resulting impact is expected on the regulatory reporting of authorized institutions.

    The SPM module CA-B-2 sets out the assessment methodology of HKMA for identifying systemically important authorized institutions in Hong Kong and for calibrating the level of any higher loss-absorbency capital requirements. The module also sets out other policy and supervisory measures to be applied to authorized institutions that are identified as being systemically important to address the risks they pose. According to the BCBS D-SIB framework, D-SIBs should be assessed in terms of the potential impact of their failure on the reference system. This can be interpreted as a “loss given default” concept rather than a “probability of default” concept. The D-SIB framework in Hong Kong aims to assess the degree to which authorized institutions are systemically important in a domestic context by reference to the financial system and domestic economy in Hong Kong. This means that the assessment focuses on addressing the externalities that the distress or failure of an authorized institution could generate at a local level. The D-SIB assessment is based on the four factors drawn from the BCBS D-SIB framework—size, interconnectedness, substitutability, and complexity. D-SIBs are identified using a two-step approach. The first step is to draw up a preliminary indicative list of D-SIBs based on the quantitative scores calculated using a set of factors or indicators. The second step involves the exercise of supervisory judgment that may serve as a complement to the quantitative assessment process—that is, to refine the preliminary indicative list by either removing or adding authorized institutions to the list.

     

    Keywords: Asia Pacific, Hong Kong, Banking, Regulatory Capital, D-SIB, G-SIB, Supervisory Policy Manual, Banking Ordinance, Systemic Risk, Basel, BCBS, HKMA

    Featured Experts
    Related Articles
    News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News
    News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News
    News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News
    News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News
    News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News
    News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News
    News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News
    News

    FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates

    The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.

    December 20, 2022 WebPage Regulatory News
    News

    FSB Reports Assess NBFI Sector and Progress on LIBOR Transition

    The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.

    December 20, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8697