The Hong Kong Monetary Authority (HKMA) has issued, by notice in the Gazette, revised versions of the Supervisory Policy Manual (SPM) modules CA-G-1 and RE-1 as statutory guidelines under section 7(3) of the Banking Ordinance.[1]

CA-G-1 “Overview of Capital Adequacy Regime for Locally Incorporated Authorized Institutions”

The changes incorporated in the revised SPM module CA-G-1 are mainly to:

  • revise the guidance on the self-assessment of proposed capital instruments to be included within an authorized institution’s capital base, so as to align with the equivalent guidance in the Code of Practice chapter LAC-1 “Resolution Planning – LAC Requirements”;
  • update the guidance in relation to capital buffer, revised securitization framework, sovereign concentration risk, leverage ratio and interest rate risks in the banking book to reflect the current capital regime in Hong Kong (in terms of legal framework and associated supervisory practices); and
  • outline the HKMA’s plan to implement the remaining Basel Committee on Banking Supervision capital standards, covering those in relation to the Basel III final reform package.

A copy of the revised SPM module CA-G-1 can be found here.

RE-1 “Recovery Planning”

The revisions contained in the revised SPM module RE-1 incorporate the additional guidance relating to recovery planning set out in the HKMA’s circular of 6 July 2017 (with appropriate modifications) and reflect the latest related developments in local and international standards and practices.

A copy of the revised SPM module RE-1 can be found here.


[1] The circulars issued in connection with the revised SPMs can be found here and here.