Featured Product

    HKMA Consults on Supervisory Policy for Systemically Important Banks

    October 29, 2020

    HKMA proposed amendments to the Supervisory Policy Manual, or SPM, module CA-B-2 on systemically important banks. The module sets out the assessment methodology of HKMA for identifying systemically important authorized institutions in Hong Kong and for calibrating the level of any higher loss absorbency capital requirements. The module also sets out other policy and supervisory measures to be applied to authorized institutions identified as being systemically important to address the risks they pose. The proposed amendments mainly aim to improve the assessment of authorized institutions’ complexity in the domestic systemically important bank (D-SIB) identification process and to update various sections of the Policy Manual to reflect recent developments. The comment period for revisions expires on December 10, 2020 and HKMA plans to finalize the amendments by December 2020.

    Notional amounts of over-the-counter (OTC) derivatives have been used in assessing complexity of banks in the global systemically important bank (G-SIB) framework and many D-SIB frameworks in other jurisdictions. As all authorized institutions have been required to report all their OTC derivatives transactions to the trade repository of HKMA since July 2017, the outstanding notional amounts of OTC derivatives of individual authorized institutions are now available to HKMA. HKMA is, therefore, proposing to replace the current qualitative assessment of the complexity factor in the D-SIB framework in Hong Kong with this measure, using a 10% weight in the quantitative assessment of the framework and to reduce the weight of the size factor from 50% to 40% correspondingly. HKMA also proposed to update various sections of Module CA-B-2 to reflect the following:

    • Completion of the phase-in of higher loss absorbency requirements under the D-SIB framework in Hong Kong in early 2019
    • Reference to the general guidance for the application of the “Principles for effective risk data aggregation and risk reporting,” incorporated into Supervisory Policy Manual Module IC-1 on risk management framework in 2017, and the expectation of HKMA on the D-SIB compliance with these principles
    • Statutory recovery planning requirements as prescribed in the Banking Ordinance that came into operation in February 2018 and the subsequent revision to the Supervisory Policy Manual module RE-1 on recovery planning in June 2020
    • Code of Practice chapter RA-2 under the Financial Institutions (Resolution) Ordinance on the approach of HKMA to resolution planning issued in July 2017
    • Intention to take recovery plans and resolvability of authorized institutions into consideration qualitatively in D-SIB assessment
    • Revision of G-SIB framework in 2018 announced by BCBS

     

    Comment Due Date: December 10, 2020

    Keywords: Asia Pacific, Hong Kong, Banking, Regulatory Capital, D-SIB, G-SIB, Supervisory Policy Manual, Systematically Important Bank, OTC Derivatives, Banking Ordinance, HKMA

    Featured Experts
    Related Articles
    News

    BIS Paper Studies Impact of Fintech Lending on Small Businesses in US

    The Bank for International Settlements (BIS) published a paper that studies impact of fintech lending on credit access for small businesses in U.S.

    September 26, 2022 WebPage Regulatory News
    News

    UK Regulators Issue CRR Changes and Stress Test Scenarios for Banks

    The Prudential Regulation Authority (PRA) issued the policy statement PS8/22 to amend the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook and update the supervisory statement SS7/13 titled "Definition of capital (CRR firms).

    September 26, 2022 WebPage Regulatory News
    News

    EBA Launches EU-Wide Transparency Exercise in 2022

    The European Banking Authority (EBA) launched the EU-wide transparency exercise for 2022, with results of the exercise expected to be published at the beginning of December, along with the annual Risk Assessment Report.

    September 23, 2022 WebPage Regulatory News
    News

    SRB on CRR Quick-Fix to Policy for Multiple Point of Entry Banks

    The Single Resolution Board (SRB) welcomed the adoption of the review of the Capital Requirements Regulation, or CRR, also known as the "CRR quick-fix."

    September 22, 2022 WebPage Regulatory News
    News

    EC Rule Lists Advanced Economies for Market Risk Capital Calculations

    The European Commission (EC) recently adopted the Delegated Regulation 2022/1622, which sets out the regulatory technical standards to specify the countries that constitute advanced economies for the purpose of specifying risk-weights for the sensitivities to equity.

    September 21, 2022 WebPage Regulatory News
    News

    EBA Publishes Final Regulatory Standards on STS Securitizations

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.

    September 20, 2022 WebPage Regulatory News
    News

    ECB Further Reviews Costs and Benefits Associated with IReF

    The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.

    September 15, 2022 WebPage Regulatory News
    News

    EBA Publishes Funding Plans Report, Receives EMAS Certification

    The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).

    September 15, 2022 WebPage Regulatory News
    News

    MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures

    The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.

    September 15, 2022 WebPage Regulatory News
    News

    BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules

    The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.

    September 15, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8521