July 05, 2019

HKMA has finalized changes to the Return of Capital Adequacy Ratio (MA(BS)3) (also known as the CAR Return) and the Return of Certificate of Compliance (MA(BS)1F) (known as Certificate), along with the accompanying completion instructions. For ease of reference, HKMA has highlighted major changes to the returns and instructions since the last version in use. The authorized institutions are required to submit the revised returns starting with the reporting position of end-September 2019.

The revisions to the CAR Return primarily seek to collect a new risk-weighted amount on sovereign concentration risk under Part I for the calculation of the capital adequacy ratio and introduce a new Part VI to collect the detailed breakdown of that amount. The revisions to the Certificate primarily seek to (i) replace, as appropriate, references to the Banking Ordinance and the Banking (Exposure Limits) Rules (Chapter 155R), which have been made obsolete by the implementation of the new Banking (Exposure Limits) Rules (Chapter 155S) (BELR). The revisions to the Certificate also add a new reporting field on “adjusted Tier 1 capital amount” to support the implementation of the new 50% land exposure limit under Part 6 of the BELR. 

In respect of the Certificate, a locally incorporated authorized institution that intends to comply with an exposure limit under the Banking Ordinance in lieu of an applicable exposure limit under the BELR during a grace period, as allowed under the BELR, should also follow the reporting instructions enclosed in Annex 2. These authorized institutions will also be required to submit additional information as set out under Supplementary Reporting Requirement in Annex 2 pursuant to section 63(2) of the Banking Ordinance.

 

Keywords: Asia Pacific, Hong Kong, Banking, Basel III, Reporting, CAR Return, BELR, Banking Ordinance, Banking (Exposure Limits) Rule, Tier 1 Capital, HKMA

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