HKMA Proposes Revisions to Group-Wide Approach to Supervision of Banks
HKMA proposed revisions to the Supervisory Policy Manual module CS-1 on group-wide approach to supervision of locally incorporated authorized institutions. The policy module describes the group-wide approach of HKMA for the supervision of authorized institutions where they form part of a financial or a commercial group, either as the head of the group (in case of a financial group) or as one of the member companies of the group (in case of a financial or a commercial group). The consultation will run until February 01, 2021.
In line with the Core Principles for Effective Banking Supervision, when HKMA supervises an authorized institution, it considers the consolidated risks of that authorized institution's banking group (typically, its immediate holding company, offices, subsidiaries, affiliates, and joint ventures, both domestic and foreign). When the banking group of an authorized institution is part of a wider group, with other group companies (both financial and non-financial) ultimately headed by a common holding company, the risks that could be posed to the authorized institutions by these group companies are also considered. In Hong Kong, the structure of a group of which an authorized institution forms a part generally falls into one or more of the following three categories where an authorized institution
- is heading a financial group with subsidiaries engaging predominately in providing financial services, such as banking, securities, and insurance.
- and its subsidiaries form part of an international banking group or other supervised financial group (one that is headed by a bank or a regulated holding company in an overseas jurisdiction, including through one or more intermediate holding companies above the authorized institution).
- and its subsidiaries are part of a group that is headed by an unregulated holding company, which controls entities engaging in financial activities or a wider range of financial and non-financial activities. This covers groups whose main lines of business are non-financial in nature. Where this is the case, HKMA will generally require the authorized institution within the group to be headed immediately by a locally incorporated holding company, to ensure that the banking (and related) activities of the holding company are subject to relevant prudential standards.
Comment Due Date: February 01, 2021
Keywords: Asia Pacific, Hong Kong, Banking, Supervisory Policy Manual, Banking Supervision, SPM CS-1, Group-Wide Supervision, HKMA
Previous Article
CMF Publishes Regulations Under Basel Framework in ChileRelated 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
