Featured Product

    HKMA Finalizes Policy Modules on Group-Wide Approach and Remuneration

    July 29, 2021

    The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions. Also revised was the policy manual CS-1 that sets out the group-wide approach currently adopted by HKMA for locally incorporated authorized institutions where they form part of a financial or a commercial group, either as the head of the group, or as one of the member companies of the group. Authorized institutions are expected to review whether their remuneration systems are consistent with the principles set out in the revised module and, if needed, to adopt all necessary changes as soon as practicable, no later than January 01, 2022.

    Policy Module on Group-Wide Supervision. In Hong Kong, the structure of a group of which an authorized institution forms a part generally falls into one or more of the three categories. Type one is where an authorized institution is heading a financial group with subsidiaries engaging predominantly in providing financial services, such as banking, securities and insurance. Type two is where the authorized institutions and its subsidiaries form part of an international banking group or other supervised financial group. Type three is where an authorized institutions 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. The Policy module on group-wide supervision was revised primarily to:

    • Reflect the current supervisory approach and practices adopted by HKMA in relation to a locally incorporated authorized institution where it forms part of a banking, financial, or commercial group
    • Incorporate relevant principles in international standards concerning the supervision of financial conglomerates
    • Cater for consequential changes arising from amendments to the Banking Ordinance, relevant rules made under the Ordinance and supervisory guidelines.

    Policy Module on Remuneration. This module sets out the supervisory expectations with regard to remuneration practices of authorize institutions. This module focuses on the governance and control arrangements for, and operation of, authorized institutions’ remuneration systems in the context of the incentives for risk-taking they may create. Authorized institutions are expected to establish and operate their remuneration policies, structures, and incentive awards with due regard to the principles set out in this module. The changes incorporated in the revised policy module are mainly to:

    • Update the existing guidelines following the most recent guidance issued by the Financial Stability Board on sound remuneration practices, and in particular on the use of remuneration tools to address potential misconduct risks
    • Strengthen the Board oversight on the formulation and implementation of remuneration systems and related control processes
    • Provide guidance in relation to the adoption of group remuneration policies and approval of remuneration packages of senior management and Key Personnel for foreign bank branches
    • Update the existing guidelines to align with the remuneration disclosure requirements in the Banking (Disclosure) Rules

    Keywords: Asia Pacific, Hong Kong, Banking, Banking Ordinance, Group-Wide Supervision, Supervisory Policy Manual, CG-5, CS-1, Remuneration, Disclosures, Governance, ESG, HKMA

    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