Revised capital, liquidity rules and amendment notice under Banking Ordinance gazetted

     The Banking (Capital) (Amendment) Rules 2017, the Banking (Liquidity) (Amendment) Rules 2017 and the Banking (Specification of Multilateral Development Bank) (Amendment) Notice 2017 were gazetted today (October 20) to implement some recent international standards on banking regulation in Hong Kong.

     The two sets of Rules seek mainly to implement the Basel III-related capital and liquidity standards which are scheduled to take effect from January 1, 2018 in accordance with the international timeline. These cover the net stable funding ratio and leverage ratio requirements, and the regulatory treatment of an authorised institution's securitisation exposures and expected loss provisions under Hong Kong Financial Reporting Standard 9.

     The Amendment Notice reflects a decision of the Basel Committee on Banking Supervision in November 2016 to include the International Development Association, a World Bank Group entity, as a multilateral development bank to which banks' exposures will be eligible for preferential capital and liquidity treatments.

     A government spokesman said, "The continuation of Basel III implementation represents our commitment to aligning our regulatory regime with the latest international regulatory standards. This is important to Hong Kong as a major international financial centre."

     A Hong Kong Monetary Authority spokesman said, "We have closely engaged the banking industry in the course of formulating the Rules and the Amendment Notice. These instruments will further strengthen the capital and liquidity positions of local authorised institutions, thereby enhancing their financial soundness and resilience."

     The Rules and the Amendment Notice will be tabled before the Legislative Council at its sitting on October 25, 2017, for negative vetting, and will come into operation on January 1, 2018.

Ends/Friday, October 20, 2017
Issued at HKT 12:00