HKMA Revises Supervisory Policy Module on Recovery Planning of Banks
HKMA revised the Supervisory Policy Manual module (RE-1) on recovery planning, which is a statutory guideline under the Banking Ordinance. The revised module incorporates the additional guidance related to recovery planning set out in an earlier HKMA circular dated July 06, 2017 (with appropriate modifications) and reflects the latest developments in related local and international standards and practices. The revised module will take effect from the date of its issuance.
The policy module on recovery planning provides guidance to authorized institutions on the key elements of effective recovery planning and sets out the HKMA approach to, and expectations in, reviewing the recovery plans of authorized institutions. It also sets out the manner in which the powers of HKMA related to recovery planning requirements in the Banking Ordinance are to be exercised. The main objective of recovery planning is to ensure that financial institutions are well-prepared to react quickly to, and to recover from, severe stress, through their own actions.
This module draws primarily on the FSB work on recovery and resolution planning and has taken into account the new Part XIIA of the Banking Ordinance, market developments in recovery planning standards and practices, and the HKMA experiences in implementing recovery planning requirements thus far. This module should be read in conjunction with the Banking Ordinance and other relevant modules of the Supervisory Policy Manual, such as CG-1 on corporate governance, IC-1 on risk management framework, IC-5 on stress testing, and the various modules on the effective management of inherent risks of authorized institutions. In case of any discrepancy between the Banking Ordinance and this module, the Banking Ordinance prevails. The guidance set out in this module applies to all authorized institutions in a proportionate manner, having regard to their size, structure, business mix, and the systemic risks associated with their activities.
Keywords: Asia Pacific, Hong Kong, Banking, Recovery Planning, Banking Ordinance, Supervisory Policy Manual, HKMA
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