Regulatory Alerts2024-02-28
Added · Updated
Revised Completion Instructions of Return of Capital Adequacy Ratio (MA(BS)3), Return of Leverage Ratio (MA(BS)27) and Return of Large Exposures (MA(BS)28)
The document provides illustrative examples and regulatory treatment guidelines for authorized institutions calculating minority interests, expected loss provisions, and large exposure capital deductions. It details the methodology for recognizing minority interests in CET1, Additional Tier 1, and Tier 2 capital based on third-party ownership percentages and minimum capital requirements. It specifies that under HKFRS 9, provisions for Stage 1 and Stage 2 exposures are treated as general provisions while Stage 3 exposures are specific provisions, requiring a regulatory reserve calculation if accounting provisions fall short of a benchmark. Furthermore, it outlines the deduction rules for insignificant and significant Large Exposure Capital (LAC) investments, applying 10% and 5% concessionary thresholds to CET1 and T2 capital respectively, with full deductions required for excess holdings.
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