Our Ref: B10/1C
5 December 2005
The Chief Executive
All authorized institutions
Dear Sir / Madam,
Reporting of Non-Bank China Exposures
I am writing to introduce several changes to the reporting of
non-bank China exposures (NBCE) by authorized institutions
(AIs).
At present, the Hong Kong Monetary Authority (HKMA) publishes on
a quarterly basis data on the banking sector's exposures to
specified non-bank Chinese entities such as ITICs*, red-chip and H-share companies. The HKMA began
collecting such data in 1998, using the Quarterly Return of Loans
and Advances and Provisions (Quarterly Return), in the light of the
closure of GITIC* and the industry's concerns at
that time about the risk of lending to other ITICs and similar
enterprises. With the increasing economic integration between Hong
Kong and the Mainland in recent years, we consider that more
comprehensive data on AIs' aggregate exposures to the Mainland is
necessary. We have therefore conducted a review of the existing
reporting framework for NBCE.
As a result of the review and after consulting your industry
Associations, we have decided to amend the Quarterly Return by
adding several new items to the table under Note (6). The main item
is the new item (f) which aims to collect information on AIs'
exposures to non-Mainland entities where the credit is for use in
Mainland China. In essence, the amendment results in two main
streams of data to be reported as NBCE. The first is entity-based
exposures i.e. exposures to specified non-bank Chinese entities, in
relation to which there is no substantial change to the current
reporting requirements. The second is the new purpose-based
exposures, i.e. exposures to non-Mainland entities where the credit
is for use on the Mainland.
An incidental change arising from the current amendment is the
introduction of a memorandum item at the end of the table under
Note (6). This aims to collect information on AIs' exposures
arising from the financing of purchase of property on the Mainland.
Similar data is currently reported by selected banks in the monthly
Residential Mortgage Lending survey (Monthly Survey). To facilitate
us in establishing a full picture, the collection of this data will
be moved from the Monthly Survey to the Quarterly Return so that
the reporting requirement extends to all AIs.
The revised Quarterly Return and the completion instructions are attached to this
letter. The amended parts, i.e. Note (6) in the Quarterly Return
and paragraph 13 of the completion instructions, have been
highlighted for your reference. Also attached are the revised Monthly Survey and its completion
instructions. The Monthly Survey is amended simply by deleting
the entire original section B while the completion instructions are
amended by deleting paragraphs 38 and 39.
Taking into account the feedback from your industry
Associations, the revised reporting framework for NBCE (together
with the amended Monthly Survey) will be introduced with effect
from the third quarter of 2006, with the first reporting to cover
the position as of end-September
2006. We shall inform you in due course when the soft copy
of the revised templates are available for download via the STET
system. In the meantime you are suggested to make timely
arrangements to cater for the revised reporting framework.
Should you have any question on this letter, please feel free to
approach your usual supervisory contact at the HKMA or Mr Yeung
Lap-yan (Tel no.: 2878-1589) / Mr Thomas Wong (Tel. no.:
2878-1553).
Yours faithfully,
Arthur Yuen
Executive Director
(Banking Supervision)
*"ITICs" stands for International Trust
and Investment Corporations and "GITIC" stands for the Guangdong
International Trust and Investment Corporation.
- Encl.
-
Quarterly Return
Completion
instructions and Appendix 1
Completion
instructions (Appendix 2)
Completion
instructions (Appendix 2.1)
Monthly
Survey
Completion
instructions
