Featured Product

    HKMA Studies Impact of COVID-19 Lending Support, Furthers Green Agenda

    June 07, 2022

    The Hong Kong Monetary Authority (HKMA) published a study that assessed the effects of two major support measures—the release of the Countercyclical Capital Buffer (CCyB) and the SME Financing Guarantee Scheme (SFGS)—on bank lending in Hong Kong. HKMA also announced that the Alliance for Green Commercial Banks onboarded five leading financial institutions as cornerstone members and published a paper on measurement, current practices, and oversight of climate risk issues

    The study on bank lending assessed the effects of the release of the CCyB and the SFGS in supporting bank lending during the COVID-19 pandemic. The analyses found strong evidence that the release of CCyB, which enhances the capital headroom and mitigates the capital constraints of banks, helped support continued provision of bank credit to the real economy during the pandemic. However, banks are found to deploy their extra capital headroom from the release of CCyB to support mainly less risky corporate loans, probably reflecting uncertainties over the credit risk of borrowers from hard-hit economic sectors and also the non-sector specific nature of the CCyB. The analyses also showed that the credit flows to hard-hit sectors have been well-supported by the SFGS, which played a complementary role to the CCyB release by incentivizing bank lending more toward these sectors. These findings provide important policy implications. The findings support the view that there may be a need to set a positive neutral rate of CCyB even in periods without excessive credit growth. The findings also show the complementary roles between broad-based (like CCyB) and targeted measures (like SFGS) in enhancing the overall effectiveness of policy measures, echoing the growing view that a combination of different policy measures should be considered to maintain stable flows of credit in times of stress. The complementarity of the micro- and macro-prudential policy measures as well as the interaction with fiscal and monetary policy measures could offer valuable insights on how to maximize the effectiveness of relief measures in response to the next crisis.

    HKMA announced that the Alliance for Green Commercial Banks onboarded five leading financial institutions as cornerstone members—Bank of China (Hong Kong), Citi, Crédit Agricole CIB, HSBC, and Standard Chartered—which collectively represent more than USD 7 trillion in assets. The Alliance is a global initiative that aims to bring together pioneers in green finance to catalyze the financial innovation, investment, and leading practices in emerging markets to address climate and environmental risks, The banks will work closely with the International Finance Corporation (IFC) and HKMA to advocate client adaptation to green strategies, promote best practices in green products and services, and unlock new business opportunities that will enable the green transition of economies. The Alliance also launched its first thought leadership paper, titled “Climate Risk: Definitions, Measurement, Current Practices and Regulatory Oversight”, in collaboration with the Hong Kong Institute for Monetary and Financial Research, the research arm of the Hong Kong Academy of Finance. The paper provides an overview of the definitions and measurement of climate risk as well as an exploration of the evolving practices in addressing climate risk, also highlighting the regulatory initiatives related to climate issues.

    Keywords: Asia Pacific, Banking, Hong Kong, Basel, CCyB, SME Financing Guarantee Scheme, Credit Risk, Lending, Alliance For Green Commercial Banks, ESG, Climate Change Risk, IFC, HKMA

    Featured Experts
    Related Articles

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News

    FASB Proposes Improvements to 2023 GAAP Reporting Taxonomy

    The Financial Accounting Standards Board (FASB) is seeking comments, until November 03, 2022, on the proposed technical and other conforming improvements for the 2023 GAAP Financial Reporting Taxonomy.

    November 03, 2022 WebPage Regulatory News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8588