Annual Self-Assessment on Compliance with the Code of Banking Practice 2002/03

The Hong Kong Monetary Authority (HKMA) announced today (Tuesday) the results of the 2002/03 annual self-assessment conducted by authorized institutions (AIs) on their compliance with the Code of Banking Practice. The assessment covered the period from 1 June 2002 to 31 May 2003.

This is the second self-assessment conducted by AIs on their compliance with the Code of Banking Practice. The self-assessment framework was introduced in 2001/02 as part of the HKMA's efforts in monitoring AIs' compliance with the Code. The self-assessment requires the internal auditors of AIs or other equivalent units to independently review their institutions' compliance with the requirements under individual sections of the Code. Where non-compliant areas¹ are identified, AIs are required to provide details of the remedial actions they plan to take, or have already taken, to rectify the situation.

The self-assessment was completed by 186 AIs and covered 188 provisions of the Code. 80% of AIs reported full compliance, 19% of AIs reported five or fewer instances of non-compliance and only one AI (less than 1%) reported more than five instances of non-compliance. Similar to last year, the majority of instances of non-compliance are in relation to Chapters 1 and 2 of the Code.

"The overall state of compliance by the industry has significantly improved during the period under review, with 99% of AIs reporting either full, or almost full², compliance with the Code. Since submitting the self-assessment reports, most AIs have already rectified the non-compliant areas identified or have set a target date to do so," said Mr William Ryback, Deputy Chief Executive of the HKMA.

Mr Ryback added that "any non-compliance with the Code should be taken seriously by institutions. The HKMA will continue to follow up with the institutions concerned to ensure that the non-compliant areas are rectified as soon as possible."

For further enquiries, please contact:
Jasmin Fung, Manager (Press), at 2878 8246 or
Kevin Ip, Manager (Press), at 2878 1687

Hong Kong Monetary Authority
23 December 2003

1. To achieve compliance, AIs should satisfy two requirements for each section of the Code. AIs should have (i) documents/information which comply with the section; and (ii) effective procedures in place to ensure compliance with the section. An instance of non-compliance refers to an AI's failure to comply with either one or both requirements for each section of the Code.
2. Almost full compliance refers to the reporting of five or less instances of non-compliance.

Annual Self-Assessment on
Compliance with the Code of Banking Practice 2002/03

Overall state of compliance by the banking industry

1. Covered the period from 1 June 2002 to 31 May 2003.
2. Covered the period from 1 December 2001 to 31 May 2002.