Hong Kong Financial Authority (HKMA) Circulars/Pointers
SUMMARY
DATE
LINK
REMARKS
In mild of the most recent wave of the Covid-19 pandemic, the HKMA issued a Round dated 7 March 2022 to (i) prolong or briefly droop sure deadlines for regulatory submissions; and (ii) prolong the deadline for completion of Steady Skilled Coaching (CPT) hours.
The HKMA is conscious that amid an upsurge of infections, the banking business has stepped up efforts to implement particular work preparations and security measures to guard workers and clients whereas guaranteeing an uninterrupted provision of important banking providers. The operational challenges licensed establishments (AIs) face below the circumstances could enhance additional within the quick time period because the Hong Kong group makes a concerted effort to fight the pandemic with city-wide measures, together with a common testing train, to convey it below management.
Extension of Deadline or Short-term Suspension of Regulatory Submissions
To allow AIs to focus sources on important operations, the HKMA considers it acceptable to offer flexibility in sure submissions required of them throughout this distinctive interval. These cowl numerous surveys, banking returns, self-assessments, consultations, and so forth. which AIs are required to make submissions to the HKMA inside specified durations. The way in which the HKMA proposes to train flexibility in every case (i.e. both by means of an extension of submission deadline, or momentary suspension of submission) is ready out at Annex 1 to the Round. For upcoming consultations, the HKMA is ready so far as acceptable to permit the business to offer suggestions inside a extra accommodative time-frame.
Relatedly, the HKMA issued a Round on 7 February 2020 informing AIs of its preparedness to permit flexibility for these encountering pandemic-related operational difficulties in assembly the deadlines for lodging paperwork with the HKMA below part 60 of the Banking Ordinance (BO) or in making disclosures below the Banking (Disclosure) Guidelines. A replica of the Round is hooked up as Annex 2 to the Round. The HKMA reiterates that the identical ideas for permitting flexibility as set out in that Round stay relevant. Any AI anticipating difficulties is requested to method the HKMA as quickly as practicable for dialogue.
Extension of Deadline for Finishing CPT Hours
In respect of related people (together with govt officers) inside the which means of the BO who’re initially required to move regulatory examinations or have undertaken to finish extra CPT hours on or earlier than 31 Could 2022, the HKMA permits the identical extension of three calendar months as that supplied by the SFC for licensed people. Software for time extension to the HKMA is just not required.
The HKMA will proceed to intently monitor the event of the pandemic conditions and collaborate with the business in sustaining the security and soundness of the banking system. The HKMA is utilizing its supervisory instruments flexibly on this interval and reiterates the significance of risk-based method.
Appendix 1 – Prolonged deadlines for regulatory submissions
Appendix 2 – “Necessities below part 60 of the Banking Ordinance (Cap. 155) and disclosure necessities below the Banking (Disclosure) Guidelines (Cap. 155M)” issued by the HKMA on 7 February 2020
(lined in merchandise 42 under)
For the SFC’s extension of deadline for finishing CPT Hours, please discuss with questions 1 and a couple of of the FAQs on “Licensing associated issues in mild of the COVID-19 pandemic” final up to date on 2 March 2022 right here.
(additionally lined in merchandise 21 of the SFC circulars/tips above)
Extension of Part 2 of the Short-term Facilitative Measures (“TFM”) and Distribution of in-scope TFM merchandise by way of Digital Onboarding (“VO”) Sandbox
AIs could proceed to undertake the TFM outlined within the round “Part 2 of the momentary facilitative measures to sort out the outbreak of COVID-19” issued by the IA on 27 March 2020 for his or her non-face-to-face (“non-F2F”) distribution of the in-scope TFM merchandise till 30 September 2022.
For AIs that distribute long run insurance coverage merchandise by way of video-conferencing instruments below the InsurTech sandbox of the IA (i.e. the VO Sandbox), in distributing in-scope TFM merchandise below TFM (i.e. all the necessities in relation to the adoption of TFM are met), the requirement of end-to-end recording of each video convention session will be disbursed with in response to the IA Round.
For the avoidance of doubt, the clarifications and reminder set out within the round entitled “Round Issued by the Insurance coverage Authority (“IA”) on Part 2 of the Short-term Facilitative Measures (“TFM”) to Deal with the Outbreak of COVID-19” issued by the HKMA on 27 March 2020 stay relevant. Specifically, AIs ought to proceed to adjust to the audio-recording necessities on the market of annuity insurance coverage merchandise in promoting Qualifying Deferred Annuity Insurance policies.
Extension of the VO Sandbox to all long run insurance coverage merchandise
As communicated with the business earlier, following the issuance of the brand new supervisory necessities associated to Funding-Linked Assurance Scheme (“ILAS”) by the Securities and Futures Fee and the IA on 1 November and 28 December 2021 respectively, the HKMA goals to set out the corresponding necessities on AIs’ promoting course of by way of a revised guideline, and goals to seek the advice of the business later this yr. AIs that intend to distribute any ILAS product, together with Safety Linked Plan, ought to present prior notification to and focus on with the HKMA earlier than launching such product.
Quick monitor for VO Sandbox functions
AIs that intend to distribute long run insurance coverage merchandise by way of video conferencing instruments can proceed to submit VO Sandbox software to the IA by way of their appointing insurers. The HKMA will work with the IA in reviewing VO Sandbox functions involving AIs.
Please additionally see “Round Issued by the Insurance coverage Authority (“IA”) on Part 2 of the Short-term Facilitative Measures (“TFM”) to Deal with the Outbreak of COVID-19” issued by the HKMA on 27 March 2020: right here
On 23 February 2022, the Monetary Secretary introduced within the 2022-23 Finances that there shall be enhancements to the SME Financing Assure Scheme (“SFGS”). The enhancements are as follows:
- The applying interval for the 80% Assure Product, the 90% Assure Product and the Particular 100% Mortgage Assure of the SFGS shall be prolonged to 30 June 2023.
- The utmost mortgage quantity per enterprise below the Particular 100% Mortgage Assure shall be raised from the full quantity of worker wages and rents for 18 months to that for 27 months, topic to a ceiling of HK$9 million (initially HK$6 million), and the utmost reimbursement interval shall be prolonged from eight years to 10 years.
- Having regard to the HKMA and the banking sector’s additional extension and new partial principal reimbursement possibility below the Pre-approved Principal Fee Vacation Scheme (please see “Remarks”), HKMC Insurance coverage Restricted (“HKMCI”) will observe go well with with the next enhancements to the principal moratorium association below the SFGS:
- The principal moratorium association below the SFGS shall be prolonged from six months to 30 months, and the appliance interval for principal moratorium shall be prolonged to end-December 2022.
- Debtors shall be given the choice to renew making partial principal reimbursement for one yr if they’re prepared and succesful. Whether or not a borrower chooses the principal moratorium association or the partial principal reimbursement possibility, the mortgage tenor and the assure interval shall be prolonged accordingly.
The HKMCI will observe up on the implementation particulars with lending establishments, and try to roll out the improved measures in 1.5 months. Efficient date and particulars shall be additional introduced.
Please see the HKMA’s round on the Pre-approved Principal Fee Vacation Scheme dated 23 February 2022 right here.
The above round has been lined in merchandise 6 under.
On 23 February 2022, the Monetary Secretary introduced within the 2022-23 Finances that there shall be enhancements to the 100% Private Mortgage Assure Scheme (“PLGS”). The enhancements are as follows:
- The applying interval of the PLGS shall be prolonged to end-April 2023.
- The utmost mortgage quantity per borrower shall be elevated from six occasions to 9 occasions the typical month-to-month earnings throughout employment, topic to a ceiling of HK$100,000 (initially HK$80,000). As well as, the utmost reimbursement interval below the PLGS shall be prolonged from six years to 10 years, and the principal moratorium association shall be prolonged from 12 months to 18 months.
The HKMCI will observe up on the implementation particulars with lending establishments, and try to roll out the above measures in 1.5 months. Efficient date and particulars shall be additional introduced. Earlier than the measures come into impact, these in want could method lending establishments to make functions based mostly on the prevailing phrases.
The HKMA issued a round dated 23 February 2022 (i) extending the Pre-approved Principal Fee Vacation Scheme (“Scheme”) by six months; and (ii) introducing a one-year partial principal reimbursement possibility (“Possibility”) which shall be provided to these clients preferring to renew principal cost regularly. Given the severity of the prevailing wave of COVID infections, the HKMA calls on AIs to proceed to undertake a sympathetic angle to clients in momentary monetary difficulties and render help to them insofar as it’s according to prudent danger administration ideas. That is supposed to keep away from an abrupt curtailment of credit score to the SME sector and could be in one of the best curiosity of the banking business as an entire. The extension of the Scheme and the introduction of the Possibility have obtained the unanimous assist of the 11 main lenders of the Mechanism. The HKMA expects all AIs to supply the identical remedy to their company clients lined by the Scheme.
Additional extension of the Pre-approved Principal Fee Vacation Scheme
In the course of the previous few months, the HKMA and the Banking Sector SME Lending Coordination Mechanism (“Mechanism”) explored the opportunity of regularly exiting the Scheme. Nevertheless, as a result of current resurgence of COVID-19 circumstances, the HKMA and the Mechanism thought of a change in plan and determined to additional prolong the Scheme by six months.
Principal funds of all loans of eligible company debtors falling due between 1 Could 2022 and 31 October 2022 ought to be deferred by six months (aside from repayments of commerce loans, which ought to be deferred by 90 days). The deferment applies whether or not or not a mortgage has beforehand been on a principal cost vacation.
Just like earlier rounds of Scheme extensions:
AIs needn’t difficulty particular person notifications to eligible clients concerning the six-month extension of the Scheme. Company clients in want of aid ought to be suggested to contact their lending establishments. AIs ought to deal with every eligible buyer’s case on a pre-approved foundation. AIs could search up to date monetary or enterprise info from clients, significantly those that have already been granted a number of extensions of cost holidays. All different phrases of the Scheme set out within the Annex to the HKMA’s round on 17 April 2020 ought to proceed to use.
- For a mortgage which has been prolonged for 540 days or extra successively because it was first drawn down (or a commerce mortgage which has been prolonged for 270 days or extra successively because it was first drawn down), AIs can undertake a versatile method and take into account on a case-by-case foundation whether or not different types of aid (together with however not restricted to full principal cost) are extra appropriate to assist the shoppers journey out the present difficulties, topic to prudent danger administration ideas.
- AIs could require a buyer to settle commerce amenities that are self-liquidating in nature if the shopper receives the underlying cost throughout the prolonged deferment interval
- For revolving amenities which are due for credit score overview between 1 Could 2022 and 31 October 2022, AIs mustn’t regulate downward the prevailing facility limits inside six months from the overview dates.
Partial principal reimbursement possibility
The HKMA and the Mechanism word that some clients could also be financially succesful and prepared to renew some principal reimbursement in alternate for larger certainty to their future reimbursement schedule. AIs are subsequently advisable to supply clients an choice to begin to resume partial reimbursement of the unique principal reimbursement quantity (i.e. the unique cost schedule when the shopper first joined the Scheme) over a interval of 1 yr. Particular remedies are advisable for several types of loans:
- For instalment loans (e.g. mortgage loans and industrial automobile loans), clients could begin to repay 20% of the unique principal reimbursement quantity inside one yr. The mortgage tenor ought to typically be prolonged correspondingly. The identical remedy ought to be relevant to industrial automobile loans taken out by private clients. The HKMA and the Mechanism will overview the association for principal reimbursement past one yr at an acceptable juncture.
- For commerce amenities, loans with bullet cost falling due inside one yr, and excellent balances of revolving amenities, clients could repay the quantity as a consequence of be settled by common instalments (e.g. quarterly or month-to-month) over a interval of two years. For commerce amenities that are self-liquidating in nature, AIs could require the mortgage to be settled when the underlying cost has been obtained by the shopper.
For the avoidance of doubt, loans which have been prolonged for 540 days or extra successively for the reason that first drawdown (or commerce loans which have been prolonged for 270 days or extra successively for the reason that first drawdown) are eligible for the Possibility.
The HKMA and the Mechanism encourage AIs to method their clients collaborating within the Scheme to determine their curiosity within the Possibility. AIs ought to emphasize to clients that taking over the Possibility is fully voluntary for the shoppers. The HKMA factors out that participating within the full principal cost deferment or the Possibility is not going to by itself end in a mortgage being downgraded, nor will it trigger the mortgage to be categorised as “rescheduled” so long as the phrases of the deferment are industrial. That mentioned, AIs ought to proceed to recognise and classify loans of consumers that are unable to fulfill the rescheduled funds in a well timed method, on the subject of the HKMA’s Guideline on Mortgage Classification System, and to make ample provisions as and when wanted.
Please see the HKMA’s round dated 17 April 2020 right here.
Please see the Annex to the HKMA’s round dated 17 April 2020 right here.
The above round has been lined in merchandise 34 under.
The HKMA issued a Round dated 18 February 2022 encouraging AIs to (i) implement “vaccine move” preparations and (ii) encourage their workers to take the third dose of COVID-19 vaccination.
Implementation of “vaccine move” preparations
In mild of the current surge in COVID-19 infections involving new, extremely transmissible strains, the HKMA advises AIs to step up their precautionary measures for safeguarding their workers and clients and guaranteeing the uninterrupted provision of important banking providers. Drawing reference from the “vaccine move” preparations by the Authorities and monetary regulators for workers getting into the office, the HKMA strongly encourages AIs to think about implementing comparable preparations acceptable to their very own settings and operational wants at their premises. Beneath such preparations:
- Workers ought to be required to current proof of vaccination for at the least the primary dose of COVID-19 vaccine earlier than getting into the office.
- Exemption could also be granted to workers who’re unfit for vaccination as a consequence of medical situations, supported by a sound medical certificates.
- Exempted workers ought to proceed to be required to bear common testing for COVID-19.
AIs are required to tell the HKMA inside 2 weeks from the date of the round (i.e. by Four March 2022) whether or not they’ll implement a “vaccine move” association and the deliberate date of implementation. If an AI decides to not implement a “vaccine move” association, it ought to present the HKMA with particulars of its concerns in reaching this choice.
Third dose of COVID-19 vaccination
HKMA acknowledges that the Hong Kong banking business has made substantial efforts to advertise COVID-19 vaccine uptake within the office, strengthening the safety of financial institution workers and clients and facilitating higher enterprise continuity planning. In keeping with the most recent info shared by AIs with the HKMA, over 90 % of financial institution workers have obtained at the least one dose of COVID-19 vaccine.
AIs are required to strongly encourage eligible workers to take the third dose of COVID-19 vaccine. AIs ought to present ample facilitating measures (e.g. vaccination go away association) for workers to obtain COVID-19 vaccination. AIs also needs to pay shut consideration to the event of the COVID-19 epidemic scenario and conduct well timed assessments of the necessity to regulate their office security measures, having regard to the Authorities’s newest steering on COVID-19 prevention and management measures.
The HKMA and the Banking Sector SME Lending Coordination Mechanism (“Mechanism”) introduced an additional 90-day reimbursement deferment for commerce amenities below the Pre-approved Principal Fee Vacation Scheme (“Scheme”).
The choice to increase the reimbursement of commerce amenities below the Scheme for 90 days till the tip of April 2022 was made in mild of the speedy unfold of the COVID-19 variant all over the world which creates uncertainties for financial restoration and the continuing world supply-chain disruptions which put strain on corporates hard-hit by the pandemic.
Just like earlier extensions:
- Company clients collaborating within the reimbursement deferment for commerce amenities below the Scheme, if in want, can prolong commerce amenities falling due between February and April 2022 for one more 90 days.
- Eligible company clients may apply for a 90-day extension of commerce amenities drawn down from November 2021 to finish of January 2022.
- For amenities that are self-liquidating in nature, banks could require the mortgage to be settled when the shopper has obtained the underlying cost.
- For commerce loans which have been successively prolonged for 270 days or extra since first draw-down, banks can undertake a versatile method and take into account on a case-by-case foundation whether or not different types of aid are extra appropriate to assist the shoppers, topic to prudent risk-management ideas.
The Mechanism is because of expire on the finish of April 2022 and, going ahead, HKMA and the Mechanism are contemplating methods to strike a steadiness between banks’ want for prudent danger administration and supporting corporates which are nonetheless hard-pressed by the pandemic.
Please see the HKMA’s round dated 5 August 2020 right here.
The above round has been lined in merchandise 23 under.
The HKMA issued a round dated 28 October 2021 requiring AIs to strongly encourage ALL workers to get vaccinated as quickly as practicable. Workers who haven’t obtained a primary dose of COVID-19 vaccine by 30 November 2021 or are unfit to obtain vaccination as a consequence of medical situations ought to bear efficient testing for COVID-19 each two weeks.
In 1 June 2021, the HKMA issued a round requiring all AIs to strongly encourage workers performing client-facing roles or crucial assist capabilities (“designated workers”) to obtain COVID-19 vaccinations, and to make preparations for designated workers who haven’t been vaccinated to bear efficient testing for COVID-19 each two weeks. The measures aimed to strengthen the safety of financial institution workers and clients towards the danger of COVID-19 and to boost the enterprise continuity planning of AIs.
Because the 1 June 2021 Round, the COVID-19 vaccination fee of designated workers has elevated steadily. The newest info shared by AIs with the HKMA reveals that over 80% of designated workers have obtained at the least one dose of COVID-19 vaccine. That mentioned, the HKMA notes that extra infectious variants of COVID-19 have unfold quickly in some abroad jurisdictions.
Bearing in mind the potential for extreme enterprise disruption to banking operations within the occasion of one other outbreak, and the expertise and practices of different main markets, the HKMA considers it important for AIs to develop the scope of their vaccination and common testing preparations to all workers. AIs ought to present ample facilitating measures for workers to obtain vaccination, resembling pre-vaccination well being checks sponsored by the AI, day without work work to get vaccinated and additional days of go away.
Please see the HKMA’s round on 1 June 2021 right here.
The above round has been lined in merchandise 12 under.
The HKMA issued a round dated 21 September 2021 (i) extending the Pre-approved Principal Fee Vacation Scheme (“Scheme”) by six months; (ii) disclosing the plan for an orderly exit of the Scheme; and (iii) exploring various reimbursement preparations for some sectors such because the transportation sector.
Additional extension of the Pre-approved Principal Fee Vacation Scheme
The HKMA and the Banking Sector SME Lending Coordination Mechanism (“Mechanism”) has determined to additional prolong the Scheme by six months to end-April 2022.
Principal funds of all loans of eligible company debtors falling due between 1 November 2021 and 30 April 2022 ought to be deferred by six months (aside from repayments of commerce loans, which ought to be deferred by 90 days). The deferment applies whether or not or not a mortgage has beforehand been on a principal cost vacation.
For a mortgage which has been prolonged for 540 days or extra successively because it was first drawn down (or a commerce mortgage which has been prolonged for 270 days or extra successively because it was first drawn down), AIs can undertake a versatile method and take into account on a case-by-case foundation whether or not different types of aid are extra appropriate to assist the shoppers journey out the present difficulties, topic to prudent danger administration ideas. In-line with the prevailing phrases of the Scheme:
- For amenities that are self-liquidating in nature, AIs could require the mortgage to be settled by the borrower if the borrower receives the underlying cost throughout the prolonged deferment interval.
- For revolving amenities which are due for credit score overview between 1 November 2021 and 30 April 2022, AIs mustn’t regulate downward the prevailing facility limits inside six months from the overview dates.
Just like earlier Scheme extensions, AIs needn’t difficulty particular person notifications to eligible clients concerning the six-month extension association. Company clients ought to be suggested to contact their lending establishments. AIs ought to deal with every eligible buyer’s case on a pre-approved foundation and should search up to date monetary or enterprise info from clients, significantly those that have already been granted a number of extensions of cost holidays. All different phrases of the Scheme set out within the Annex to the HKMA’s round on 17 April 2020 proceed to use.
The HKMA and the Mechanism are planning for an orderly exit of the Scheme
Because the utilization of the Scheme has dwindled to a low degree on the again of regular financial restoration, the HKMA and the Mechanism take into account that planning ought to be made for the discontinuation of the Scheme, according to prudent danger administration ideas. The HKMA will interact the banking business to debate the suitable exit technique, drawing reference from expertise of abroad jurisdictions that are in numerous phases of withdrawal from pandemic aid measures. Additional particulars shall be shared at a later date.
Different preparations for assuaging money circulate issue in transportation sector
HKMA stresses that AIs ought to proceed to be accommodative and actively discover various reimbursement association with the debtors, resembling partial principal reimbursement over an extended time frame as favoured by some sectors.
Making reference to the follow of upgrading of public mild buses (PLBs) to 19 seats, the Mechanism agreed that AIs ought to train larger flexibility in dealing with the brand new financing functions from taxi operators for changing aged automobiles. The HKMA considers that AIs don’t have to rigidly adhere to the 85% loan-to-value ratio cap supplied that prudent danger administration ideas are noticed and that the brand new loans are solely used for buy of recent automobiles. The Mechanism additional agrees that AIs ought to actively take into account extending the utmost tenors for current taxi and PLB loans from 25 years to 30 years, and for non-franchised buses from 7 years to 10 years, after bearing in mind the circumstances of particular person debtors. Throughout session with the transportation sector, views had been floated that, as an alternative choice to the six-month full principal cost vacation, AIs ought to provide partial reimbursement of principal over an extended time frame (resembling 20-50% principal reimbursement over one to 2 years) which has the advantage of larger certainty for the debtors. The Mechanism encourages AIs to discover such choices with their clients. The HKMA may even make reference to those recommendations when planning for the exit of the Scheme.
Please see the HKMA’s round on 17 April 2020 right here.
Please see the Annex to the HKMA’s round on 17 April 2020 right here.
The above round has been lined in merchandise 34 under.
90-day deferral for commerce amenities below the Pre-approved Principal Fee Vacation Scheme
The HKMA and the Banking Sector SME Lending Coordination Mechanism (“Mechanism”) introduced a 90-day reimbursement deferment for commerce amenities below the Pre-approved Principal Fee Vacation Scheme (“Scheme”).
Beneath the Scheme (which was lined in a earlier round (please see “Remarks”)), commerce loans have been granted 90-day extension 5 occasions. A few of these loans will fall due in August 2021. The Mechanism recognised that Hong Kong’s exterior commerce has continued to enhance and the native financial system is regularly recovering, nevertheless given the fluctuating pandemic scenario all over the world, financial restoration remains to be laden with uncertainties. The Mechanism subsequently has agreed to additional prolong the reimbursement interval of commerce amenities below the Scheme for 90 days till the tip of October, when the entire Scheme will expire.
company clients could contact their banks, which in flip will deal with reimbursement deferment requests on a “pre-approved” foundation. Options for commerce amenities below the Scheme are just like earlier extensions:
- Company buyer in want can additional prolong for 90 days their commerce amenities falling due between August and October 2021.
- Eligible company clients can apply for a 90-day extension of commerce amenities drawn down from Could to end-July 2021.
- For amenities that are self-liquidating in nature, banks could require the mortgage to be settled when the underlying cost has been obtained by the shopper.
- For commerce loans prolonged for 270 days or extra cumulatively since their first draw-downs, banks can undertake a versatile method and take into account on a case-by-case foundation whether or not different types of aid are extra appropriate to assist the shoppers, topic to prudent risk-management ideas.
When the Scheme expires at end-October, the HKMA and the Mechanism will take into account the best way ahead, bearing in mind consultations with the banking business and industrial sectors, in addition to abroad practices in dealing with comparable schemes.
Please see the HKMA’s circulars dated 5 August 2020 right here.
The above round has been lined in merchandise 23 under.
HKMA issued a Round urging all authorised establishments (AIs) to introduce extra efficient measures to encourage all financial institution workers to get vaccinated. Specifically, consideration ought to be given to following the current follow of the Authorities and the HKMA of giving additional days of go away to workers who’ve taken each doses of the vaccine, or offering different appropriate and ample incentives for inoculation.
HKMA requires that every one AIs ought to strongly encourage workers performing client-facing roles or crucial assist capabilities to get vaccinated. AIs ought to establish and draw up an inventory of designated workers anticipated to obtain inoculation. The checklist ought to embody, with out limitation, these workers concerned in department operation, wealth administration and industrial banking, who’ve frequent face-to-face interactions with clients, in addition to these accountable for crucial IT, information centre, treasury and settlement operations.
Financial institution workers included within the checklist ought to be requested to get vaccinated as quickly as potential. Preparations ought to be made for these, who haven’t but been vaccinated or are unfitfor vaccination as a consequence of medical situations, to bear efficient testing for COVID-19each two weeks. Following the recommendation of public well being authorities, the HKMA considers that polymerase chain reaction-based nucleic acid testing utilizing mixed nasal and throat swabs is an efficient check for COVID-19 for this objective.
AIs are required to undergo the HKMA, inside two weeks from the date of the Round, a breakdown by division or operate of designated workers anticipated to receiveinoculation. Workers included within the checklist ought to bear the primary COVID-19 check by 30June 2021 in the event that they haven’t but taken the primary dose of vaccine by then.
The Round added that selling a excessive vaccination fee is a collective effort of the entire group in the direction of the final word resumption of regular financial actions, and emphasised that the banking sector has an essential position to play on this course of and may make its contribution to safeguarding public well being and bringing Hong Kong’s financial system onto a gradual restoration path. This could additionally present the requisite basis for Hong Kong to re-start worldwide journey, which is essential for sustaining Hong Kong’s standing as a global monetary centre.
HKMA issued a round on 20 April 2021 in relation to the 100% Private Mortgage Assure Scheme (PLGS) proposed within the 2021-2022 Finances. The PLGS supplies a supplementary financing possibility for people affected by cessation of important recurrent incomes from employment as a result of COVID-19 pandemic.
The PLGS shall be administered by HKMC Insurance coverage Restricted (HKMCI). HKMCI will depend on the skilled experience, judgment and care of collaborating lender establishments in conducting buyer due diligence and verification of candidates’ eligibility for concessionary low-interest loans. After drawdown, the loans shall be bought by the collaborating lender establishments to The Hong Kong Mortgage Company Restricted (HKMC). HKMC’s buy of the loans shall be funded by the HKSAR Authorities. The Authorities has issued a letter of consolation to HKMA confirming its dedication below the PLGS.
On this round, HKMA units out its coverage intent on the related regulatory remedies in respect of a mortgage granted by a collaborating authorised establishment (AI) to an eligible borrower below the PLGS:
1) Regulatory and reporting remedies
Beneath the PLGS association, an AI is taken into account to have an publicity to HKMC absolutely lined by the Authorities’s dedication below the PLGS. It follows that:
- In relation to the Banking (Publicity Limits) Guidelines, the letter of consolation shall be authorised for the needs of the Rule 57(1)(d) in respect of an AI’s publicity to HKMC. The quantity so lined shall be deducted from the AI’s exposures to HKMC.
- In relation to the Banking (Capital) Guidelines (BCR),
- For the STC and BSC method – an AI could deal with its publicity to HKMC as lined by the Authorities’s dedication, and risk-weight the publicity as one assured by the Authorities.
- For the IRB method – an AI ought to search HKMA’s exemption approval below part 12(1) of the BCR and apply the STC method for loans granted below the PLGS as a substitute. HKMA commits to course of the appliance expeditiously.
- SPM module CR-G-7 – making use of the underlying precept of paragraph 3.2.Four of the module bearing in mind the PLGS preparations, HKMA wouldn’t take into account it unreasonable for an AI to treat the quilt of the Authorities’s dedication for the PLGS as enabling the AI to deal with an publicity to HKMC below the PLGS as “secured” (within the sense of there being a separate obligation to pay by the Authorities) for danger administration functions.
- In relation to banking return reporting preparations
Concerning the Capital Adequacy Ratio return
< >Beneath the BSC method, receivables ought to be reported as “Loans to or assured by the sovereigns of Tier 1 international locations” with a 0% danger weight.Beneath the STC method, the receivables ought to be reported as “public sector entity exposures” (below the subcategory of “home PSEs”) earlier than CRM and “sovereign exposures” with a 0% danger weight after CRM.
For Half I, II and III, if publicity to the HKMC is reported in these elements, any excellent receivables from the HKMC below the PLGS at quarter-end ought to be reported within the “Memorandum merchandise: Deductions”.For Half IV, any excellent receivables from the HKMC below the PLGS at quarter-end are handled as an exempted publicity and ought to be reported as an oblique publicity to the Authorities.
20 April 2021
HKMA issued a round on 24 March 2021 in relation to the territory-wide COVID-19 Vaccination Programme for Hong Kong residents.
The important thing message is that it’s within the curiosity of licensed establishments to assist the Authorities’s vaccination drive and assist stop the unfold of COVID-19 within the office and shield the well being and security of their workers and clients. That is to make sure that banks can function and supply banking providers to their clients with out interruption provided that they carry out a crucial monetary intermediation position within the financial system and supply providers which are important to the broader public curiosity.
The round supplies examples of supportive measures to facilitate workers who want to get vaccinated to take action, particularly those that work together regularly with clients or carry out crucial capabilities. These examples embody:
- Disseminating details about the Vaccination Programme to workers and referring them to the Authorities’s devoted web site (www.covidvaccine.gov.hk) for queries they might have in relation to the COVID-19 vaccines;
- Permitting workers to get vaccinated throughout working hours or implementing versatile working hours to accommodate vaccination appointments; and
- Granting workers day without work work, the place needed, to relaxation after vaccination.
Licensed establishments also needs to monitor updates to the Vaccination Programme and associated COVID-19 steering issued by the Authorities, and supply related info to their workers with a view to encouraging vaccine uptake.
HKMA issued a Round dated 10 March 2021 on the next:
(a) FATF pause in its overview course of for strategic deficiencies in AML/CFT regimes
In response to the COVID-19 pandemic, the Monetary Motion Job Drive (FATF) selected a normal pause within the overview course of for the checklist of “high-risk jurisdictions topic to a name for motion”. Licensed Establishments (AIs) and Saved Worth Facility (SVF) Licensees ought to proceed to discuss with the HKMA round on “Statements issued by the Monetary Motion Job Drive” dated 11 March 2020, particularly, making use of the improved due diligence measures and different counter-measures in relation to Iran and the Democratic Folks’s Republic of Korea.
(b) Outcomes of the FATF Plenary assembly held in February 2021
FATF member delegates mentioned and reviewed numerous strategic initiatives and country-specific processes. Specifically, the FATF is creating Steering to assist each private and non-private sectors in implementing new necessities to establish, assess, perceive and mitigate proliferation financing danger as outlined in Suggestion 1 and its Interpretive Word. The Steering goals to help each private and non-private sectors in conducting a danger evaluation within the context of proliferation financing, and making use of corresponding danger mitigation measures. The FATF is consulting non-public sector stakeholders earlier than finalising the Steering.
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(Addressed
to AIs)
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(Addressed to SVF Licensees)
Please see HKMA’s Round dated 11 March 2020 right here.
FATF’s assertion on “Jurisdictions below Elevated Monitoring” will be present in right here.
Outcomes of the FATF will be present in right here.
The HKMA and the Banking Sector SME Lending Coordination Mechanism (“Mechanism”) introduced that the Pre-approved Principal Fee Vacation Scheme (“Scheme”) shall be prolonged for one more six months to October 2021.
All principal funds of loans falling due between Could and October 2021 by eligible company clients shall be deferred by one other six months (aside from repayments of commerce loans, which shall be deferred by 90 days). Just like the Scheme extension in November 2020, banks is not going to difficulty particular person notifications to eligible clients concerning the deferment association. company clients could contact their banks. Deferment requests shall be dealt with on a “pre-approved” foundation. Banks could request clients to offer up-to-date operational and monetary info to higher perceive their wants when processing their requests.
Because the Scheme has been rolled out for practically one yr, to be able to strike a steadiness between catering for the distinctive circumstances dealing with clients and the necessity for prudent danger administration, the Mechanism has agreed that, for loans which have been prolonged for 540 days or extra cumulatively since first being drawn down (or commerce loans which have been prolonged for 270 days or extra cumulatively since first being drawn down), banks can undertake a versatile method and take into account, on a case-by-case foundation and topic to prudent danger administration ideas, whether or not different types of aid are extra appropriate to assist the shoppers journey out the present difficulties.
Please see the HKMA’s circulars dated 5 August 2020 right here.
The above round has been lined in merchandise 23 under.
Please additionally see the HKMA’s announcement dated 2 September 2020 right here.
The above announcement has been lined in merchandise 19 under.
90-day deferral for commerce amenities below the Pre-approved Principal Fee Vacation Scheme
The HKMA and the Banking Sector SME Lending Coordination Mechanism (“Mechanism”) introduced a 90-day reimbursement deferment for commerce amenities below the Pre-approved Principal Fee Vacation Scheme (“Scheme”).
Beneath the Scheme (which was lined in a earlier round (please see “Remarks”)), commerce loans have been granted 90-day extension respectively in Could, August and November 2020. A few of these loans will fall due in February 2021. The Mechanism has agreed that in mild of the COVID-19 pandemic, company clients can additional prolong their commerce amenities for one more 90-day interval. Eligible company clients may apply for a 90-day extension of commerce amenities drawn down from November 2020 to end-January 2021.
Just like earlier extensions of the Scheme, company clients could contact their banks, which in flip will deal with reimbursement deferment requests on a “pre-approved” foundation. Nevertheless, it is very important word some extra options for commerce amenities below the Scheme:
- For amenities that are self-liquidating in nature, banks could require the mortgage to be settled when the underlying cost has been obtained by the shopper.
- For commerce loans prolonged for 270 days or extra cumulatively since their first draw-downs, banks can undertake a versatile method and take into account on a case-by-case foundation whether or not different types of aid (resembling repaying the commerce loans by instalments) are extra appropriate to assist the shoppers (topic to prudent risk-management ideas).
Flexibility below the Scheme for patrons within the transportation sector
The HKMA and the Mechanism additionally mentioned numerous difficulties dealing with clients within the transportation sector and recognized the next help that banks can present:
- Banks shall be extra versatile in dealing with new financing functions by public mild bus (“PLB”) operators to finance the improve of their automobiles from 16 seats to 19 seats.
- Banks don’t have to rigidly adhere to the 85% loan-to-value ratio cap (supplied that prudent risk-management ideas are noticed) for brand spanking new loans used just for the acquisition of recent automobiles.
- As regards new loans granted for taxis, PLBs and different non-franchised buses, banks agreed that they might actively take into account extending the utmost mortgage tenors for taxis and PLBs to 30 years, and the utmost mortgage tenors for non-franchised buses to 10 years, on a brief foundation for the subsequent two years.
- Banks could present different types of aid to assist alleviate the reimbursement burden of related industrial automobile house owners, topic to prudent risk-management ideas.
The HKMA reminded banks to be sympathetic to clients who are usually not eligible for the Scheme to assist tide them over this troublesome time (whereas observing prudent risk-management ideas).
Please see the HKMA’s circulars dated 5 August 2020 right here.
The above round has been lined in merchandise 23 under.
HKMA printed a round to attract the eye of all Licensed Establishments (AIs) and Saved Worth Facility (SVF) Licensees to the latest replace from the Monetary Motion Job Drive (FATF) on COVID-19-related cash laundering / terrorist financing (ML/TF) dangers (please discover the hyperlink to FATF’s replace in Remarks column). The replace highlights developments since FATF’s earlier reviews and supply particulars on how criminals proceed to aim to take advantage of the worldwide monetary techniques, with case research (together with some supplied by Hong Kong), and illustrate how the dangers have developed together with the COVID-19 pandemic.
The FATF replace reinforces the persevering with significance of a risk-based response which doesn’t disrupt important and bonafide providers. HKMA has already articulated its regulatory expectations on this respect in earlier circulars (please discover the hyperlinks to these circulars in Remarks column).
This round additionally supplies updates on efforts of HKMA and different organisations on combating ML/TF dangers:
- HKMA has been monitoring COVID-19 associated impression on ML/TF dangers and dealing intently with AIs and SVF Licensees to deal with the developments;
- the Fraud and Cash Laundering Intelligence Taskforce, the public-private partnership for info sharing in Hong Kong which consists of legislation enforcement company, banking supervisor and ten retail banks in Hong Kong, has been delivering alerts and case-based intelligence on COVID-19 associated deceptions;
- the Fraud Threat Administration Taskforce established below the Hong Kong Affiliation of Banks (HKAB) broadcasted a video clip on tv to remind the general public to remain alert of COVID-19 associated fraudulent actions and shared good practices on fraud prevention and detection with the business; and
- HKAB additionally held a sharing session, with HKMA’s assist, to share monetary crime traits noticed and challenges encountered throughout COVID-19, and good practices of AIs in managing and mitigating ML/TF dangers.
HKMA reminds AIs and SVF Licensees to check the FATF replace together with the ML/TF danger info supplied by way of the above boards, and take into account the related implications for his or her ML/TF danger administration.
Please see FATF’s replace dated December 2020 right here.
Please see the HKMA’s circulars dated 30 July 2020:
Replace 1
Replace 2
The above circulars have been lined in objects 24 and 25 under respectively.
Please see the HKMA’s circulars dated 7 April 2020:
Hyperlink 1
Hyperlink 2
The above circulars have been lined in objects 37 and 38 under respectively.
Please see the press launch printed on HKMA’s web site dated 29 Could 2020 right here.
The above press launch has been lined in merchandise 27 under.
The HKMA printed a round asserting the extension of the Pre-approved Principal Vacation Scheme by 6 months.
As lined in a earlier round (please see “Remarks”), the HKMA and the Banking Sector SME Lending Coordination Mechanism had put in place the Pre-approved Principal Fee Vacation Scheme for its authorised establishment members (AI) to alleviate money circulate difficulties confronted by small and medium measurement companies. Beneath the Scheme, eligible small and medium measurement company clients might make deferred repayments on mortgage principal funds.
The Scheme has now been prolonged for an additional 6 months so that every one mortgage principal funds falling due between November 2020 and April 2021 shall be deferred by six months (aside from repayments of commerce loans, which shall be deferred by 90 days). Collaborating AIs will deal with every eligible buyer’s case on a “pre-approved” foundation, and should request clients (particularly those that have been granted a number of extensions of cost holidays) to offer up-to-date enterprise and monetary info to higher perceive their wants when processing their circumstances.
Please see the HKMA’s round dated 5 August 2020 right here.
The above round has been lined in merchandise 23 under.
The HKMA printed a round on changes launched by the HKMA on 19 August 2020 to the prudential measures for mortgage loans on non-residential properties.The HKMA famous that because of the COVID-19 outbreak, non-residential property markets have seen main corrections, with the costs of workplaces, flatted factories and retail premises declining by 15%, 11%, and 10% respectively. The transaction quantity of non-residential properties additionally contracted within the first half of 2020, and can probably stay below strain as a consequence of lowered enterprise confidence and rising geopolitical tensions.
In mild of this, the HKMA has determined to regulate the countercyclical macroprudential measures for mortgage loans on non-residential properties. The relevant loan-to-value ratio caps below completely different situations for non-residential properties have been adjusted upward by 10%. These modifications will take impact from 20 August 2020 and can apply to all transactions the place the provisional sale and buy settlement is signed on or after that date.
The HKMA reiterated that these measures are supposed to use to mortgage loans for the aim of financing property transactions or the refinancing of current properties. They don’t seem to be supposed to use to credit score amenities secured by properties for the aim of financing the enterprise operation of corporates, as these credit score amenities are topic to a set of complete credit score underwriting requirements and common credit score opinions by licensed establishments. AIs could ship any questions they’ve concerning this round to [email protected].
The HKMA printed a round reminding Licensed Establishments (AI) of some essential investor safety measures in mild of the present volatility within the markets.
In view of the current value volatility of varied markets and funding merchandise (together with shares, bonds, commodities, treasured metals, FX, and so forth.) in addition to the operational challenges led to by COVID-19, AIs are reminded to stay vigilant, and proceed to deal with clients pretty and act in one of the best curiosity of their clients within the sale of funding merchandise, according to the Code of Banking Apply and the Deal with Clients Pretty Constitution. AIs ought to train additional care when dealing with leveraged transactions the place the shopper might have potential losses exceeding the invested quantity.
Registered establishments are additionally reminded to look at the next necessities when making solicitations or suggestions on funding merchandise regulated by the Securities and Futures Ordinance:
- guarantee correct product due diligence, bearing in mind, amongst others, the market situations amid the COVID-19 scenario, which can impression on the danger return profile and prospect of an funding. The place the continual overview by an RI of the danger score of an funding product leads to the next danger score being attributed to the product, the RI ought to observe the prevailing requirement of exposing such enhance in danger score to clients to whom it has advisable and bought the product;
- give due consideration to related circumstances of a buyer when assessing the suitability of an funding product for the shopper. The place an RI is conscious of fabric modifications to a buyer’s circumstances (e.g. impression arising from the COVID-19 scenario), such modifications ought to be taken into consideration within the evaluation;
- clarify to the shopper the dangers and options of the funding product; and
- current balanced views: don’t focus solely on advantageous phrases resembling excessive coupon charges or yields, however ought to clarify additionally the disadvantages and potential draw back dangers.
Almost about leveraged transactions, AIs ought to
- make ample disclosure of the character, key options and phrases, and the related dangers of leveraged merchandise or transactions, particularly the danger of dropping greater than the shopper’s invested quantity (and the place relevant the danger of getting limitless loses, e.g. a buyer writing a unadorned name possibility)
- make sure that the shopper is prepared and has adequate web price to imagine the dangers and bear the potential losses of the leveraged transactions.
In follow, AIs are anticipated to place in place insurance policies and controls to make sure that focused clients have been supplied with ample disclosure of, and are able to understanding the danger of leveraged or margin buying and selling, and the opportunity of being topic to margin-calls inside a short while interval. AIs are additionally anticipated to place in place mechanism to observe clients’ margin maintained with the AIs. The HKMA will proceed to observe AIs’ compliance with the regulatory necessities as a part of its on-going supervision.
The HKMA printed a round asserting that in mild of the problems brought on by the COVID-19 outbreak, all Licensed Establishments (AI) are requested to increase the principal cost for commerce loans below the Pre-approved Principal Fee Vacation Scheme (Scheme) for one more 90 days.
In keeping with the HKMA, the deferment ought to cowl commerce loans each at present topic to the Scheme in addition to these drawn between 1 Could 2020 to 31 July 2020 by eligible clients with no excellent funds overdue for greater than 30 days as at 1 August 2020. For amenities that are self-liquidating in nature, AIs could require the mortgage to be settled when the underlying cost has been obtained by the shopper. All different phrases of the Scheme said within the Annex to the HKMA’s round on 17 April 2020 will proceed to use.
As solely between 10% to 20% of eligible company clients have chosen to take up the Scheme and with AIs adopting work-from-home preparations in response to the pandemic, AIs is not going to difficulty particular person notifications to clients concerning the deferment association. company clients are requested to contact their AIs, which is able to deal with principal deferment requests on a “pre-approved” foundation. AIs could request clients to offer up-to-date operational info to higher perceive their wants when processing their requests.
The HKMA reiterated that this extension of the Scheme is not going to by itself render a commerce mortgage to be downgraded, nor will it trigger the mortgage to be categorised as “rescheduled” so long as the phrases of the extension are “industrial”. This precept applies no matter whether or not or not the commerce mortgage is already on a cost vacation. That mentioned, debtors who’re unable to fulfill the restructured cost schedule ought to proceed to be acknowledged in a well timed method and the classification of their loans ought to discuss with the HKMA’s Guideline on Mortgage Classification System in addition to beforehand issued FAQs.
The HKMA will proceed to interact banks and the industrial sectors by way of the Mechanism and expects to reach at a choice concerning follow-up preparations for the Scheme, which is able to finish in October, as quickly as potential.
Please see the Annex to the HKMA’s round on 17 April 2020 right here.
(additionally lined under in merchandise 34)
The HKMA printed a round highlighting some key observations and business practices to help Licensed Establishments (AI) in creating sustained efforts to deal with the evolving COVID-19 scenario and assist operational responses that are according to the risk-based method (RBA).
The HKMA said that because the scenario continues to evolve, it has grow to be clear that measures initially supposed to be short-term could now need to be stored in place by AIs for comparatively longer, or in some circumstances reintroduced as new clusters of COVID-19 circumstances emerge. Key observations and practices highlighted by the HKMA embody:
1. Buyer due diligence below social distancing and journey restrictions
The HKMA famous that social distancing and a big discount in journey have considerably impacted the flexibility of AIs to work together with current and potential clients. AIs are more and more utilizing video conferencing to work together with clients in the midst of on-boarding and ongoing buyer due diligence opinions. Some AIs have utilised the pliability supplied within the Anti-Cash Laundering and Counter-Terrorist Financing Ordinance to delay verifying the shopper’s id, whereas adopting acceptable danger mitigating measures. Along with distant on-boarding for particular person retail clients at present provided by greater than 10 AIs, some AIs have additionally expedited testing of comparable initiatives for company clients.
2. Stress on AML/CFT sources
The HKMA famous that every one AIs have some type of enterprise continuity planning in place to keep up sound operations. To handle the strain on sources, AIs have been adopting a variety of responses, which collectively have minimised potential impression to AML/CFT processes. These embody reprioritising work on the idea of ML/TF dangers, reallocation of workers, staggering workplace hours and equipping workers with work-from-home capabilities. Some AIs are additionally expediting their exploration of regulatory know-how (RegTech) options (e.g. machine studying) to cut back the variety of false positives generated from transaction monitoring and screening techniques, and thus enhancing effectivity and effectiveness.
The HKMA continues to observe useful resource allocation as a part of AIs’ operational responses to ML/TF danger administration and reiterates by way of this engagement the significance of making use of the ideas of the RBA, sustaining ample information of selections made and that related controls or danger urge for food needn’t be compromised within the course of.
3. Rising threats and modifications in clients’ behaviour
The HKMA famous that AIs have elevated their understanding of and vigilance to rising COVID-19 associated monetary crime dangers, together with by way of the Fraud and Cash Laundering Intelligence Taskforce (FMLIT) and a lately established Fraud Threat Administration Taskforce below the Hong Kong Affiliation of Banks. Consistent with world traits, some AIs have additionally recognized modifications in buyer behaviour, resembling digital funds and on-line transactions, and have been working to include their understanding of rising dangers into transaction monitoring guidelines and situations. The HKMA additional famous that it had noticed examples the place RegTech helps to construct out a extra collaborative, intelligence-led method to monetary crime danger administration and that some AIs are making use of superior analytics to assist detect networks and customary vulnerabilities.
The HKMA will proceed to work intently with AIs to assist ongoing business efforts, according to the ideas of RBA. AIs could method the HKMA by way of their traditional contacts on the AML & Monetary Crime Threat Division or at [email protected] for any questions on this round.
The HKMA printed a round updating Saved Worth Facility (SVF) Licensees on some key observations and business practices which the HKMA shared with the banking sector in a round dated 30 July 2020 concerning the continuing AML/CFT response to COVID-19 associated challenges.
The HKMA said that because the scenario continues to evolve, it has grow to be clear that measures initially supposed to be short-term could now need to be stored in place by SVF Licensees for comparatively longer, or in some circumstances reintroduced as new clusters of COVID-19 circumstances emerge. The HKMA will proceed to work intently with SVF licensees to assist ongoing business efforts, and reiterated that the ideas of the RBA present the pliability to be each pragmatic and conscious of the evolving COVID-19 scenario and the challenges it presents.
Please see the HKMA’s round on key observations and business practices at right here.
(additionally lined above in merchandise 24)
The HKMA printed a press launch asserting the extension of the momentary US Greenback Liquidity Facility to 31 March 2021. The US Greenback Liquidity Facility was initially launched by the HKMA in a round dated 22 April 2020 in response to a brief repurchase settlement facility (FIMA Repo Facility) launched by the US Federal Reserve on 31 March 2020, with the intention of offering licensed banks with an extra channel to acquire US greenback liquidity in mild of the tightness within the world US greenback interbank cash markets amid volatilities and uncertainties within the world monetary markets led to by the unfold of COVID-19. Given the choice by the US Federal Reserve to increase the FIMA Repo Facility to 31 March 2021, the HKMA has determined to increase the momentary US Greenback Liquidity Facility accordingly.
The operational parameters of the momentary US Greenback Liquidity Facility will stay unchanged. A complete of US$10 billion is at present out there to banks below the Facility within the type of repurchase transactions for a time period of seven days by way of aggressive tenders held by the HKMA each week.
The HKMA printed a press launch on the enhancement measures to the 80% and 90% Assure Merchandise below the SME Financing Assure Scheme (SFGS). The enhancement measures had been included within the second spherical of the Anti-epidemic Fund introduced by the Hong Kong Authorities in April 2020. Now Hong Kong Mortgage Company Insurance coverage Restricted (HKMCI) introduced that the enhancement measures will take speedy impact from 29 Could 2020.
The enhancement measures are supposed to permit extra enterprises affected by COVID-19 to use for assured loans to alleviate their money circulate burden in mild of the present financial challenges.
Beneath the enhancement measures, the utmost mortgage quantity per enterprise for the 80% Assure Product is elevated from HK$15 million to HK$18 million, whereas the utmost mortgage quantity per enterprise for the 90% Assure Product is elevated from HK$6 million to HK$Eight million. All borrowing enterprises below the SFGS can profit from the enhancements. The eligibility protection of each assure merchandise can be prolonged to listed corporations in Hong Kong. As well as, for the requirement of private assure by particular person shareholder(s) below the Particular 100% Mortgage Assure, the relevant proportion of fairness curiosity is lowered from over 70% to over 50%, which is according to that for the 80% and 90% Assure Merchandise.
The Hong Kong Authorities will present curiosity subsidy for the 80% and 90% assured loans, with the quantity of subsidy capped at 3%. Every mortgage is entitled to an curiosity subsidy for a most interval of 12 months. HKMCI has reached a consensus with the Authorities and the lenders on the implementation particulars, that are as follows:
- All excellent loans as of 30 April 2020 will obtain the primary batch of curiosity subsidy for as much as Three months, of which cost shall be successively made ranging from the tip of June 2020 (Please discuss with the Annex for particulars);
- The cost of subsequent curiosity subsidy shall be made on a month-to-month foundation thereafter;
- Curiosity subsidy is relevant to new mortgage functions efficiently submitted earlier than 31 Could 2021.
The curiosity subsidy shall be routinely deposited into related financial institution accounts, and no software shall be required, to expedite the assist to the borrowing enterprises.
The HKMA printed a round setting out the appliance of extra steering issued by the Basel Committee on Banking Supervision (BCBS) on Three April 2020 concerning alleviation of the impression of COVID-19 on the worldwide banking system within the context of Hong Kong. The round targeted on the next Three measures:
- Clarifications on the remedy of extraordinary assist measures associated to COVID-19
Governments and public authorities in lots of jurisdictions have launched extraordinary assist measures to alleviate the monetary and financial impression of COVID-19. These measures embody, amongst others, assure programmes for financial institution loans and cost holidays provided by banks to debtors. To make sure that AIs mirror the risk-reducing impact of those measures when calculating their regulatory capital necessities, the HKMA has additionally enclosed an Annex to this round setting out a number of technical clarifications. - Anticipated credit score loss provisioning
The HKMA expects AIs to proceed to use the related anticipated credit score loss (ECL) frameworks for accounting functions, and likewise expects ECL estimates to mirror the mitigating impact of the numerous financial assist and cost aid measures put in place by public authorities and the banking sector. The availability of aid measures to debtors mustn’t routinely end in exposures transferring from a 12-month ECL to a lifetime ECL measurement. Moreover, AIs are anticipated to train knowledgeable judgement and to make use of the pliability inherent in HKFRS/IFRS 9, for instance, to offer due consideration to long-term financial traits in estimating ECL.
Nevertheless, the BCBS transitional preparations for the regulatory capital remedy of ECL accounting is not going to be adopted in Hong Kong. As an alternative, the HKMA has lowered the regulatory reserve requirement by half to offer AIs with extra room on their steadiness sheets to cater for future financing wants, as per a round dated Eight April 2020. - Margin necessities for non-centrally cleared OTC derivatives
Following the announcement made by the BCBS and the Worldwide Group of Securities Commissions (IOSCO) on Three April 2020, the HKMA will defer the ultimate two implementation phases of margin necessities for non-centrally cleared OTC derivatives by an extra yr. With this extension, the ultimate implementation section will begin on 1 September 2022, at which level lined entities with a mean combination notional quantity (AANA) of non-centrally cleared OTC derivatives larger than HKD 60 billion shall be topic to the necessities. As an intermediate step, from 1 September 2021, lined entities with an AANA of non-centrally cleared OTC derivatives larger than HKD 375 billion shall be topic to the necessities.
The HKMA will proceed to observe the banking and supervisory implications of COVID-19, and coordinate with the BCBS and different related standard-setting our bodies on responses to the pandemic.
Please see the Annex to this round setting out clarifications on the remedy of extraordinary assist measures associated to COVID-19 right here.
Please additionally see the HKMA’s earlier round dated Eight April 2020 for additional particulars concerning the lowered regulatory reserve requirement right here.
(additionally lined under in merchandise 36)
Please additionally see the SFC’s round dated 7 Could 2020 concerning the SFC’s measures with respect to margin necessities for non-centrally cleared OTC derivatives right here.
(additionally lined in merchandise 15 of the SFC circulars/tips above)
Please see the extra steering issued by the BCBS right here.
Please additionally see the HKMA’s earlier round dated 17 April 2020 for additional particulars concerning the Scheme right here.
(additionally lined under in merchandise 34)
The HKMA printed a round offering info on the momentary US Greenback Liquidity Facility (Facility), which was introduced on the identical day. The Facility was launched to offer licensed banks with extra US greenback liquidity to fulfill their US greenback funding wants. That is a part of the concerted efforts by central banks to assist alleviate tightness within the world US greenback interbank cash markets in mild of the appreciable volatilities and uncertainties within the world monetary markets brought on by the unfold of COVID-19. In precept, the Facility is underpinned by the Federal Reserve’s FIMA Repo Facility.
The US greenback liquidity shall be supplied to licensed banks by way of aggressive tender within the type of repurchase transactions for a time period of seven days, settled on the day following the tender.
From 6 Could 2020, the HKMA will conduct a aggressive tender each week (usually on Wednesday) for licensed banks to submit bids for US greenback liquidity. Presently a complete of US$10 billion is accessible below the Facility. A licensed financial institution could submit one legitimate bid in every tender, and the bid have to be at the least US$100 million or an integral a number of of US$100 million. The HKMA will contact profitable banks to substantiate and prepare switch of eligible property as collateral to the HKMA, and tender notices and tender outcomes shall be printed on a chosen web page on the HKMA web site. The names of the banks collaborating within the tenders or these allotted with funds, and particular person allotment quantities is not going to be disclosed.
The HKMA intends to keep up the Facility till 30 September 2020, and can make a separate announcement if the tip date modifications. The HKMA could revise any of the parameters of the Facility at any time as needed, bearing in mind market situations, use of the Facility and different related elements. Banks could contact the Financial Operations Division of the HKMA at 2878 8104 or at [email protected] if they’ve any questions concerning the operation of the Facility.
Please see the press launch asserting the Facility’s launch right here
Please see the annexes to the round for extra particulars concerning the power:
Annex A – Key Parameters of the Facility
Annex B – Abstract of Phrases
Annex C – Submission of Tender Software
The HKMA printed a round referring to the SFC’s round to issuers of SFC licensed paper gold schemes (PGS). The HKMA reminded licensed establishments (AI) offering PGS providers to adjust to the SFC’s round, the Code of Banking Apply, and the Deal with Clients Pretty Constitution. Specifically, the HKMA reminded AIs to
- deal with clients truthfully and pretty;
- take note of clients’ curiosity and be accountable for upholding monetary client safety;
- present acceptable info in any respect phases of the connection with the shoppers (together with any untoward circumstances regarding PGS providers and corresponding impression on clients); and
- rectify any operational incident having vital impression on continued provision of PGS providers.
The HKMA additional reminded AIs which difficulty PGS to instantly report back to the HKMA and SFC any untoward circumstances regarding PGS providers which will have materials buyer impression, together with any choice to droop subscription and/or redemption, and uplift suspension/resume dealing.
Please see the SFC’s round right here.
(additionally lined in merchandise 18 of the SFC circulars/tips above)
Please additionally see the HKMA’s earlier press launch dated 16 April 2020 for additional particulars of the Particular 100% Mortgage Assure right here
(additionally lined under in merchandise 35)
The HKMA printed a round asserting the launch of the Pre-approved Principal Fee Vacation Scheme (Scheme) on 1 Could 2020. The Scheme is meant to offer speedy aid to eligible small-to-mid-sized corporates dealing with monetary points within the wake of the COVID-19 outbreak.The HKMA expects all licensed establishments (AIs) to take part within the Scheme, and has confirmed that all the 11 main lenders within the Banking Sector SME Lending Coordination Mechanism will take part.
Beneath the Scheme, collaborating AIs will pre-approve deferment of mortgage principal funds falling due between 1 Could 2020 and 31 October 2020 of eligible small-to-mid-sized corporates for as much as 6 months. All company debtors which have an annual gross sales turnover of HK$800mn or much less (estimated to cowl greater than 80% of all company debtors in Hong Kong), and that don’t have any excellent mortgage funds overdue for greater than 30 days are eligible for the Scheme. Functions by debtors are usually not required in order that monetary aid will be supplied to corporates within the timeliest method. In accordance with the HKMA’s mortgage classification tips, deferments of principal funds below the Scheme is not going to by themselves render a mortgage account to be downgraded to a decrease class.
For company clients not at present lined by the Scheme or have cost falling due earlier than 1 Could 2020, the HKMA expects AIs to undertake a sympathetic stance and proactively attain out to these clients to know whether or not they require comparable help and assess, on a case-by-case foundation, whether or not it’s according to established danger administration ideas to offer such preparations.
The HKMA will difficulty FAQs concerning the operation of the Scheme. AIs could method the HKMA by way of their traditional contacts on the Banking Supervision Division for any query about this round.
The HKMA printed a press launch reporting that Hong Kong Mortgage Company Insurance coverage Restricted (HKMCI) had introduced the launch of its Particular 100% Mortgage Assure below the SME Financing Assure Scheme (SFGS) and would start receiving functions from 20 April 2020. The assure association is meant to assist ease the money circulate problems with enterprises affected by the COVID-19 outbreak.
HKMCI welcomes all lenders below the SFGS to take part within the assure association. The next lenders will obtain functions from 20 April 2020: Financial institution of China (Hong Kong) Restricted, Financial institution of Communications (Hong Kong) Restricted, Chong Hing Financial institution Restricted, DBS Financial institution (Hong Kong) Restricted, Dangle Seng Financial institution Restricted, Nanyang Business Financial institution, Ltd., OCBC Wing Dangle Financial institution Restricted, Commonplace Chartered Financial institution (Hong Kong) Restricted, The Financial institution of East Asia, Restricted and The Hongkong and Shanghai Banking Company Restricted. Different lenders have additionally indicated their curiosity in becoming a member of.
The HKMA printed a round informing regionally integrated licensed establishments (AI) of its choice to decrease the regulatory reserve (RR) requirement on regionally integrated AIs by 50% with speedy impact. The HKMA famous that the choice was taken partly in mild of the necessity to present AIs with extra lending headroom to assist clients in dealing with the COVID-19 outbreak, and inspired AIs to take action. The HKMA expects that AIs mustn’t use the RR launch for dividend distribution, share buyback or cost of bonus to senior administration. The HKMA will proceed to evaluate the scenario to find out if any additional changes are needed. AIs could method the HKMA by way of their traditional contacts on the Banking Supervision Division for any query about this round.
The RR requirement was applied below the Hong Kong Monetary Reporting Commonplace 9 (HKFRS 9) since January 2018. The HKMA observes that regionally integrated AIs have made good progress in enhancing their anticipated loss provisioning fashions, techniques and controls, and on the whole reported notable will increase of their accounting provisions for the second half of 2019 given the deterioration within the financial surroundings. This means that the “anticipated loss” provisioning requirement below HKFRS 9 is strong and conscious of modifications in exterior situations. Accordingly, the necessity for regionally integrated AIs to keep up an RR on prime of accounting provisions has diminished. This additionally performs an element within the HKMA’s choice to decrease the RR requirement.
39
The HKMA and the banking sector be a part of forces to assist Hong Kong’s financial system overcome the outbreak of COVID-19
The HKMA printed a press launch summarizing the outcomes of a gathering with Hong Kong Mortgage Company Insurance coverage Restricted (HKMCI), main banks, and representatives from the industrial sector concerning measures by banks and the HKMA to assist SMEs within the wake of the COVID-19 outbreak. The HKMA famous that a variety of earlier measures had seen success and supplied statistics on this regard. The HKMA and HKMCI additionally instructed 5 extra measures to additional assist SMEs in addressing cash-flow strain.
Three April 2020
Click on right here
Please additionally see Authorized Replace right here.
40
Liquidity measures in response to Covid-19 outbreak
The HKMA printed a round outlining liquidity measures taken to make sure the continued operation of the interbank market and banking system. The measures taken give attention to three features, particularly the HKMA’s Liquidity Amenities Framework, the Federal Reserve’s momentary Monetary Companies Immediate Messaging Affiliation (FIMA) Repo Facility, and the HKMA’s supervisory expectations on the usage of liquidity buffers below the liquidity protection ratio (LCR) and liquidity upkeep ratio (LMR) regimes. The HKMA additionally reminded licensed establishments (AI) to make sure they’ve the suitable inner insurance policies and processes in place when utilizing the HKMA’s liquidity amenities and buffers, and the HKMA will attain out to AIs to make sure compliance.
Three April 2020
Click on right here
Please additionally see the Annex to the round containing clarifications on the HKMA’s Standby Liquidity Amenities (SLF) framework right here.
41
Deferral of Basel III implementation and HKMA’s supervisory actions in response to COVID-19
The HKMA printed a round in response to the choice by the Group of Central Financial institution Governors and Heads of Supervision (GHOS) to defer the implementation of Basel III by one yr, to permit banks time to take care of present points arising from the COVID-19 outbreak. The HKMA said that it might accordingly delay its personal implementation of Basel III to 1 January 2023, according to GHOS.
30 March 2020
Click on right here
42
Necessities below part 60 of the Banking Ordinance (Cap. 155) and disclosure necessities below the Banking (Disclosure) Guidelines (Cap. 155M)
The HKMA printed a round concerning the requirement for licensed establishments (AIs) integrated in or outdoors Hong Kong to file audited annual accounts and different paperwork with the HKMA below part 60 of the Banking Ordinance. The HKMA will enable AIs to use in writing for an extension of the deadline to take action, if needed as a consequence of operational difficulties brought on by the COVID-19 outbreak.
7 February 2020
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Measures to alleviate impression of the novel coronavirus
The HKMA printed a round outlining measures that licensed establishments (AI) ought to implement to alleviate the impression of COVID-19 on their clients. The measures embody momentary aid measures to reduce the impression of monetary stress, resembling principal moratorium for residential and industrial mortgages and payment discount for bank card borrowing. The HKMA additionally instructed AIs ought to undertake a sympathetic stance in coping with clients dealing with monetary stress, and talk their insurance policies to related workers to make sure constant remedy of consumers.
6 February 2020
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