Regulatory Alerts2019-03-01
Added · Updated
Revised Return of Capital Adequacy Ratio (Form MA(BS)3) Enclosure 5: Completion Instructions - Part II (Capital Base)
The document provides illustrative examples and regulatory treatment guidelines for calculating minority interests, deductions from capital bases, and expected loss provisions under HKFRS 9. It specifies that minority interests held by third parties in consolidated bank subsidiaries are recognized in CET1, Additional Tier 1, and Tier 2 capital using specific formulas and thresholds. For investments in capital instruments and non-capital LAC liabilities, insignificant holdings are subject to 10% and 5% concessionary thresholds with pro-rata deductions, while significant holdings require full deduction from AT1 or Tier 2 capital. Additionally, non-complying capital instruments issued before 1 January 2013 are phased out over a ten-year period, with recognition capped at 90% in 2013 and reducing by 10 percentage points annually until reaching 0% in 2022.
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