Key Functions

Monetary Stability
Linked Exchange Rate System
Interest Rate Adjustment Mechanism
Liquidity Support to Banks
EFAC Currency Board
Sub-Committee
Transparency of Currency Board Operations
Notes & Coins of
Hong Kong
Notes
Coins
Coin Collection Programme
Milestones of Monetary Reform
History of Hong Kong's Exchange Rate System
Banking Stability
Banking Policy & Supervision
The Three-tier Banking System
Regulatory Framework
Advisory Committees
Supervisory
Co-operation
Regulation of Money Brokers
Consumer Corner
HKMA’s Work in Relation to Strengthening Financial Consumer Protection
Consumer Education Programme
Frequently Asked Questions
Complaints about Banks
Internet Banking
Security Controls for ATM Services
Guide to Authorization
Supervisory Policy Manual
Enhanced Competency Framework for Banking Practitioners
Oversight of Financial
Market Infrastructures
Basel III
Other Basel Committee Standards
Exposure Limits
Systemically Important Authorized Institutions (SIBs)
Resolution
Review of the HKMA's Work on Banking Stability
Sharing of Mortgage Data
Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT)
AML/CFT-related Circulars
Sanctions-related Notices and Updates
Countercyclical Capital Buffer (CCyB)
International Financial Centre
International & Regional Financial Co-operation
International & Regional Financial Co-operation
Participation in Multilateral Agencies & International Forums
Co-operation with Other Central Banks
Application of the "One Country, Two Systems" Principle
Renminbi Business in Hong Kong
Infrastructure Financing Facilitation Office (IFFO)
Debt-market Development
Exchange Fund Bills & Notes
Government Bond Programme
Important Policy Initiatives Affecting The EFBN Programme & Other Hong Kong Dollar Debt Instruments
Infrastructure
Financial Infrastructure in Hong Kong
Payment Systems
CMU
OTC Derivatives Trade Repository
System Links
International
Co-operation
Pan-Asian CSD Alliance
Retail Payment Development
Useful Links
Regulatory Regime for Stored Value Facilities (SVF) and Retail Payment Systems (RPS)
Regulation of Stored Value Facilities (SVF)
Complaints about SVF Licensees
Regulation of Retail Payment Systems (RPS)
Fintech Facilitation Office (FFO)
Enhanced Competency Framework for Banking Practitioners
Exchange Fund
History
Management
Transparency
93.7799

Systemically Important Authorized Institutions (SIBs)

Systemically Important Authorized Institutions (SIBs)

SIBs are banks whose impact, in the event of distress or failure, could cause significant disruption to the financial system and ultimately, the broader economy. In recognition of the additional risks posed by SIBs, they are subject to specifically tailored regulatory and supervisory measures, including capital surcharges in the form of higher loss absorbency (HLA) capital buffers; more intensive supervision (particularly in areas such as risk management and governance) and prioritised recovery and resolution planning.

The Basel Committee on Banking Supervision (Basel Committee) issued a framework for the identification of global systemically important banks (G-SIBs) and the determination of the corresponding HLA requirements in July 2013. This framework has been used by the Basel Committee and the Financial Stability Board (FSB) to generate a list of G-SIBs. The latest list was issued by the FSB in November 2016 and identified 30 G-SIBs.

For domestic systemically important banks (D-SIBs), the Basel Committee issued a principles-based framework in October 2012. National authorities in individual jurisdictions are responsible for establishing a methodology for assessing the degree to which banks are systemically important locally, and calibrating the level of an appropriate HLA requirement, as well as for applying other policy/supervisory measures appropriate to address the risks posed by a D-SIB. To implement the Basel Committee standards locally, the Monetary Authority is empowered under the Banking (Capital) Rules to designate AIs incorporated in Hong Kong as D-SIBs or G-SIBs and to determine the associated HLA requirements.

Currently there are no G-SIBs headquartered and incorporated in Hong Kong.

The D-SIB framework in Hong Kong is based on the four assessment criteria drawn from the Basel Committee’s D-SIB framework, namely size, interconnectedness, substitutability and complexity. The identification of D-SIBs locally consists of a two-step process. The first step is to draw up a preliminary indicative list of D-SIBs based on the quantitative scores calculated using the factors and a set of indicators. The second step involves the exercise of supervisory judgement to serve as a complement to the quantitative assessment process.

HLA requirements must be met with Common Equity Tier 1 capital. Depending on the systemic importance of the AI designated as a D-SIB or G-SIB, the HLA requirement ranges from 1% to 3.5% of an AI’s total risk-weighted assets (as calculated under the Banking (Capital) Rules).

The HLA requirement, together with the Countercyclical Capital Buffer (if applicable), takes effect as an extension of the Basel III Capital Conservation Buffer. Accordingly, if and when a D-SIB’s Common Equity Tier 1 capital ratio falls within the extended buffer range, the D-SIB will be subject to restrictions on the discretionary distributions it may make (including by way of dividend, share buyback, discretionary coupon payments on capital instruments and discretionary bonus payments to staff) according to a specified scale as set out in section 3H(1) of the Banking (Capital) Rules. The effect of this is that D-SIBs will be required to retain earnings in order to bolster their regulatory capital.


Implementation in Hong Kong

Supervisory Policy Manual module CA-B-2: Systemically Important Banks (February 2015)

Consultation on a Framework for Systemically Important Banks in Hong Kong (March 2014)


Documents issued by the Basel Committee on Banking Supervision and Financial Stability Board relating to SIBs

2016 list of global systemically important banks (November 2016)

2015 update of list of global systemically important banks (November 2015)

2014 update of list of global systemically important banks (November 2014)

Global systemically important banks: updated assessment methodology and the higher loss absorbency requirement (July 2013)

A framework for dealing with domestic systemically important banks (October 2012)


SIB announcement in Hong Kong

30 December 2016 Press release
31 December 2015 Press release
16 March 2015  Press release
  FAQs

 

Last revision date: 10 January 2017
ABOUT THE HKMA
The HKMA
Tender Invitations
Careers@HKMA
Legislative Council Issues
Links
The HKMA Information Centre
KEY FUNCTIONS
Monetary Stability
Banking Stability
International Financial Centre
Exchange Fund
PUBLICATIONS & RESEARCH
Annual Report
Half-Yearly Monetary & Financial Stability Report
Quarterly Bulletin
HKMA Background Briefs
Reference Materials
Research
MARKET DATA & STATISTICS
CMU Bond Price Bulletin
Economic & Financial Data for Hong Kong
Monthly Statistical Bulletin
Monetary Statistics
KEY INFORMATION
Press Releases
Speeches
Guidelines & Circulars
Forthcoming Events
inSight
OTHER INFORMATION
Consumer Corner
Consumer Education Programme
Complaints about Banks
Complaints about SVF Licensees
Internet Banking
Fraudulent Bank Websites, Phishing E-mails and Similar Scams
Be Careful of Bogus Phone Calls and SMS Messages
Authenticate the Callers and Bank Hotline Numbers
Register of AIs & LROs
Register of Securities Staff of AIs
Register of SVF Licensees
Investment Products Related to Lehman Brothers
Photo Gallery