Compared with the December 2018 list, the HLA requirement has increased for Standard Chartered and decreased for Hang Seng Bank.
The HKMA (Hong Kong Monetary Authority) has published its latest list of D-SIBs (domestic systemically important banks).
Hong Kong’s D-SIB framework is based on the four assessment criteria: size, interconnectedness, substitutability and complexity. The identification of D-SIBs consists first drawing up a preliminary indicative list based on quantitative scores calculated using the factors and a set of indicators. The second step involves the exercise of supervisory judgement.
Based on the HKMA’s annual assessment results, the list of authorised institutions designated as D-SIBs remains unchanged from the December 2018 list.
Under the D-SIB framework, each of the authorised institutions designated as a D-SIB is to include a HLA (higher loss absorbency) requirement in the calculation of their regulatory capital buffers within a period of 12 months after the formal notification.
The HLA requirement applicable to a D-SIB ranges between 1% and 3.5%, depending on the assessed level of the D-SIB’s systemic importance.
Compared with the list of D-SIBs published in December 2018, the HLA requirement for Standard Chartered Bank has increased from 1% to 1.5%; and that for Hang Seng Bank has decreased from 1.5% to 1%.
The latest list of D-SIBs, available here, applies from 1 January 2020.