Our Ref : B1/15C
             B1/21C

11 October 2001

The Chief Executive
All authorized institutions

Dear Sir/Madam,

Supervisory Policy Manual ("SPM")
SA-1: "Risk-based Supervisory Approach"

I am pleased to inform you that, following consultation with the industry, the Monetary Authority is issuing the above module of the SPM today.

This module, which serves to explain the HKMA's risk-based supervisory approach, is being issued as a guidance note. On-line access to the module is available under the icon of "Supervisory Policy Manual" in the HKMA's public (http://www.info.gov.hk/hkma/eng/bank/spma/index.htm) and private (http://www.hkfin.net) web-sites.

Should you have any questions relating to this module, please feel free to contact Mr Jack Heelan on 2878-1944.

Yours faithfully,

Simon Topping
Executive Director (Banking Policy)

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