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

    PRA to Elaborate on Approach to Transposition of CRD5 by Mid-December

    PRA published a statement that explains when to expect further information on the PRA approach to transposing the Capital Requirements Directive (CRD5), including its approach to revisions to the definition of capital for Pillar 2A.

    November 30, 2020 WebPage Regulatory News
    News

    SRB Sets Out Work Program for 2021-2023

    SRB published the work program for 2021-2023, setting out a roadmap to further operationalize the Single Resolution Fund and to achieve robust resolvability of banks under its remit over the next three years.

    November 30, 2020 WebPage Regulatory News
    News

    EIOPA Consults on KPIs on Sustainability for Non-Financial Reporting

    EIOPA is consulting on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build these ratios.

    November 30, 2020 WebPage Regulatory News
    News

    US Agencies Issue Statement on LIBOR Transition

    US Agencies (FDIC, FED, and OCC) issued a joint statement encouraging banks to cease entering into new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021, to facilitate an orderly LIBOR transition.

    November 30, 2020 WebPage Regulatory News
    News

    GHOS Endorses Coordinated Approach to Mitigate COVID Risks for Banks

    The Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS, endorsed a coordinated approach to mitigate COVID-19 risks to the global banking system.

    November 30, 2020 WebPage Regulatory News
    News

    HM Treasury Extends Consultation Dates for FRF and Solvency II Reviews

    HM Treasury extended the consultation period on Phase II of the Future Regulatory Framework (FRF) Review, from January 19, 2021 to February 19, 2021.

    November 30, 2020 WebPage Regulatory News
    News

    ECB Publishes Guide on Management of Climate and Environmental Risks

    ECB finalized guidance on the way it expects banks to prudently manage and transparently disclose climate and other environmental risks under the current prudential rules.

    November 27, 2020 WebPage Regulatory News
    News

    BCBS Amends Capital Treatment of Non-Performing Loan Securitizations

    BCBS published a technical amendment to the capital treatment of securitizations of non-performing loans by banks.

    November 26, 2020 WebPage Regulatory News
    News

    PRA Policy on Stressed VaR and RNIV Calculations Under Market Risk

    PRA published the policy statement PS23/20 on the calculation of stressed value at risk (sVAR) and risks not in value at risk (RNIV) under the market risk framework.

    November 26, 2020 WebPage Regulatory News
    News

    BoE to Move Statistical Data Collection to BEEDs Portal

    BoE announced that the Data and Statistics Division is planning to move collection of statistical data to the BoE Electronic Data Submission (BEEDS) portal.

    November 25, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6179