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62.4756

Countercyclical Capital Buffer (CCyB)

Countercyclical Capital Buffer(CCyB)

The CCyB is a part of the Basel III regulatory capital framework. In essence it is a mechanism to build up additional capital during periods of excessive credit growth when risks of system-wide stress are observed to be growing markedly. This capital can then be “released” when the credit cycle turns to absorb losses and enable the banking system to continue lending in the subsequent downturn.

The CCyB requirement is expressed as a percentage of an authorized institution’s risk-weighted assets and has to be met with Common Equity Tier 1 capital (CET1) (the highest quality regulatory capital in terms of loss absorption). Whilst the CCyB requirement remains in place it takes effect as an extension of an authorized institution’s Capital Conservation Buffer. This means that authorized institutions will not breach their continuing authorization criteria should their levels of CET1 capital fall within the extended buffer zone, but they will be subject to restrictions on distributions of earnings for so long as they do not meet the extended buffer requirement.

Whilst regulatory capital requirements are imposed by national authorities on banks incorporated in their jurisdictions, the Basel Committee on Banking Supervision has established a jurisdictional reciprocity mechanism for the CCyB. In order to maintain a level playing field between domestic and cross-border banks, each national authority is responsible for ensuring that the banks incorporated in their jurisdiction (for which they are the home supervisor) calculate buffer requirements on the basis of the CCyB in place in the jurisdictions where they have private sector credit exposures.

Basel III provides for implementation of the CCyB from 1 January 2016. To implement the measure locally, the Monetary Authority has, through the Banking (Capital) (Amendment) Rules 2014, amended the Banking (Capital) Rules to incorporate provisions for the imposition of capital requirements arising from the operation of the CCyB, as well as from the Capital Conservation Buffer which also goes into effect from 1 January 2016.


Guidance

Notes for Reference of Document set out in the tables below:

XX-X-N = SPM Module Code, CIR = Circulars, N.N.N = Guideline No, FAQ = Frequently Asked Questions, QB = Quarterly Bulletin

Reference

Document

Issued

CA-B-1

Countercyclical Capital Buffer (CCyB) - Approach to its Implementation

07/04/2017

CA-B-3

Countercyclical Capital Buffer (CCyB) – Geographic Allocation of Private Sector Credit Exposures

25/09/2015

FAQ

Frequently Asked Questions on the CCyB

27/01/2015

QB

Implementing the Basel III Countercyclical Capital Buffer

25/09/2014



Latest applicable CCyB rate for Hong Kong

(updated on 27 January 2017)

  • Currently in effect: 1.25%
  • Announced: 1.875% to become effective 1 January 2018.


Announcement of CCyB decisions

CCyB Announcements


Historical CCyB rate for Hong Kong

CCyB historical time series


Comprehensive Reference Indicators

Current list


Latest applicable CCyB rates for overseas jurisdictions

Jurisdictional CCyB rates posted by the Bank for International Settlements

CCyB rates notified to the HKMA by overseas jurisdictions
(No notification received to date)

Announcements by the HKMA regarding applicable jurisdictional CCyB rate in overseas jurisdictions
(No announcement issued to date)


Returns

MA(BS)25 - Quarterly Reporting on the Countercyclical Capital Buffer (CCyB)


Basel Committee's Papers

 

19 Oct 2015 Frequently asked questions on the Basel III Countercyclical Capital Buffer
1 Jun 2011 Basel III: A global regulatory framework for more resilient banks and banking systems (rev June 2011)
16 Dec 2010 Guidance for national authorities operating the countercyclical capital buffer
Last revision date: 26 September 2017
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