HKMA Reduces Countercyclical Capital Buffer in Hong Kong to 2.0%
HKMA announced that the countercyclical capital buffer (CCyB) for banks in Hong Kong has been reduced from 2.5% to 2.0%, with immediate effect, in accordance with the Banking (Capital) Rules. The information drawn from reviewing a range of indicators suggests that the economic environment in Hong Kong has deteriorated significantly since June 2019. Given these developments, HKMA believes that it is appropriate to reduce the CCyB to allow banks to be more supportive to the domestic economy.
In reaching the decision to reduce the Hong Kong jurisdictional CCyB ratio, HKMA reviewed a range of quantitative indicators and qualitative information. This included the “indicative buffer guide” produced by the HKMA Initial Reference Calculator (IRC), which is a metric that takes into account conditions in local credit and property markets. By mapping deviations (gaps) of the ratios of credit-to-GDP and the residential property prices to rentals, from their respective long-term trends to the Basel III CCyB range of 0% to 2.5%, the IRC produces a consistent starting point for further analysis. HKMA also reviewed a series of “Comprehensive Reference Indicators” and all relevant information available at the time of decision. HKMA will continue to monitor credit and economic conditions in Hong Kong closely and the CCyB ratio will be reviewed on a quarterly basis or more frequently.
Effective Date: October 14, 2019
Keywords: Asia Pacific, Hong Kong, Banking, CCyB, Basel III, Banking Capital Rules, Systemic Risk, Macro-Prudential Policy, HKMA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
FSB Publishes Update on Its Market Fragmentation WorkNext Article
IASB Proposes Updates to IFRS Taxonomy for 2019Related 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),
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
SEC Extends Comment Period on Climate Risk Disclosures
The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.
