Our Ref: S4/3C

22 March 2001

The Chief Executive
All Locally Incorporated Authorized Institutions

Dear Sir / Madam,

I write to inform you that the Hong Kong Monetary Authority (HKMA) has designed the attached worksheet which may be used by your institution for assessing the impact of the New Accord under the standardised approach. The worksheet is a simplified application of the New Accord, incorporating most of the major changes proposed by the Basel Committee under the standardised approach. The options and assumptions that will be used for completing the worksheet are specified in the completion instructions.

We will be selecting a sample of authorized institutions to participate in a study of the impact of the New Accord. Some will use a survey form designed by the Basel Committee for the purposes of its global survey of the quantitative impact. The others will use the attached worksheet for domestic Hong Kong purposes. These institutions will be approached separately on the arrangements for participating in the impact analysis. The results of the analysis will help us to understand better the potential impact of the New Accord on the local banking sector. For those institutions that have not been asked to participate in the exercise, the worksheet would still be useful for self-assessment purposes.

The worksheet is currently in draft form. It will be available in the HKMA's private and public web-sites. We intend to finalise it for use by the selected institutions in the first week of April. If you have any comments on the contents or design of the worksheet, we would be grateful if you could send these comments to Mr Daniel Wong through e-mail at Daniel_WK_Wong@hkma.gov.hk by 31 March 2001. Should you have any questions regarding the worksheet, please feel free to contact Mr Cho-hoi Hui at 2878-1485 or Mr Daniel Wong at 2878-1626.

Yours faithfully,

D T R Carse
Deputy Chief Executive

Encl

c.c. Chairman, The Hong Kong Association of Banks
Chairman, The Deposit-taking Companies Association