Regulatory Alerts2021-05-12
Added · Updated
Revised Banking Returns and Disclosure Templates for Revised Counterparty Credit Risk Framework - Enclosure 5: Completion Instructions - MA(BS)3 (Part II - Annex)
The document provides illustrative examples and tables for calculating the recognition of minority interests in CET1, Additional Tier 1, and Tier 2 capital, and details the regulatory treatment of expected loss provisions under HKFRS 9. It specifies that general provisions for Stage 1 and 2 exposures are treated as general provisions while Stage 3 provisions are specific provisions, requiring a regulatory reserve if accounting provisions fall short of a benchmark. Additionally, it outlines the deduction methodology for insignificant and significant LAC investments in capital instruments and non-capital liabilities, applying 10% and 5% concessionary thresholds to determine amounts subject to deduction or risk-weighting. The text also defines the phase-out schedule for non-complying capital instruments issued before 1 January 2013, reducing their recognition in capital by 10 percentage points annually from 90% to 0% between 2013 and 2022.
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