Hong Kong Regulations

BANKING (CAPITAL) RULES - SECT 35

Interpretation of Part 3

PART 3

Determination of Capital Base

Divison 1—General

In this Part, unless the context otherwise requires—

"available-for-sale" (可供出售)—

   (a)  in relation to financial assets other than derivative  contracts,
        means that the financial assets—

        (i)    are designated by an authorized institution as available for
               sale;

        (ii)   are not classified by an authorized institution as— (A) loans
               and receivables; or (B) financial assets at fair value through
               profit or loss; or

        (iii)  are not classified by an authorized institution as held to
               maturity investments;

   (b)  in relation to financial instruments other than derivative  contracts,
        means that the financial instruments—

        (i)    are designated by an authorized institution as available for
               sale;

        (ii)   are not classified by an authorized institution as— (A) loans
               and receivables; or (B) financial instruments at fair value
               through profit or loss; or

        (iii)  are not classified by an authorized institution as held to
               maturity investments;

   (c)  in relation to loans, means that the loans are designated by an
        authorized institution upon initial recognition as available for sale;

"cash flow hedge" (現金流對沖), in relation to a hedging relationship of
an authorized institution, means a hedge of an exposure of the institution to
variability in cash flows which—

   (a)  is attributable to—

        (i)    a particular risk associated with an asset or liability
               recognized on the institution's balance sheet; or

        (ii)   a highly probable forecast transaction; and

   (b)  could affect the institution's profit or loss;

"connected company" (連繫公司), in relation to an authorized institution,
means—

   (a)  a subsidiary, or the holding company, of the institution; or

   (b)  a company which falls within section 64(1)(b), (c), (d) or (e) of the
        Ordinance in respect of the institution;

"consolidation requirement" (綜合規定), in relation to a subsidiary of an
authorized institution, means—

   (a)  a section 79A(1) requirement whereby a provision of Part XV of the
        Ordinance is to apply to the institution on a consolidated basis in
        respect of that subsidiary; or

   (b)  a section 98(2) requirement whereby the capital adequacy ratio of the
        institution is to be calculated on a consolidated basis in respect of
        that subsidiary;

"core capital" (核心資本), in relation to an authorized institution, means
the sum, calculated in Hong Kong dollars, of the net book values of the
institution's capital items specified in section 38;

"debentures" (債權證) has the meaning assigned to it by section 2(1) of the
Companies Ordinance ( Cap 32);

"debt securities" (債務證券) means any securities other than shares,
stocks or import or export trade bills;

"financial assets not held for trading purposes"
(非作交易用途的金融資產), in relation to an authorized institution,
means any financial assets—

   (a)  held by the institution except—

        (i)    financial assets which are acquired principally for the
               purposes of selling in the near term; and

        (ii)   financial assets which form part of a portfolio of financial 
               instruments— (A) which are managed collectively; and (B) for
               which there is evidence of a recent actual pattern of
               short-term profit-taking; and

   (b)  designated by the institution as financial assets not held for 
        trading purposes;

"forecast transaction" (預期交易) means an uncommitted but anticipated
future transaction;

"irredeemable" (不可贖回), in relation to non-cumulative preference
shares, means that the shares are—

   (a)  irredeemable; or

   (b)  irredeemable except with the prior consent of the Monetary Authority;

"other regulatory capital instrument" (其他監管資本票據) means—

   (a)  subordinated debt—

        (i)    issued by an authorized institution incorporated in Hong Kong;
               and

        (ii)   included in the institution's supplementary capital; or

   (b)  a capital instrument—

        (i)    which is similar to subordinated debt described in paragraph

   (a)  ; and

        (ii)   which is issued by a company which is not an authorized
               institution incorporated in Hong Kong but is— (A) subject to
               supervision by the relevant banking supervisory authority, or
               any securities regulator or insurance regulator who has a
               supervisory responsibility for the company, as the case may be;
               and (B) subject to capital requirements imposed on it in the
               country by the relevant banking supervisory authority, or any
               securities regulator or insurance regulator who has a
               supervisory responsibility for the company, as the case may be;

"special purpose vehicle" (特定目的工具), in relation to an authorized
institution, means a company or any other entity—

   (a)  which is established by the institution for the sole purpose of
        raising capital for the institution; and

   (b)  which does not trade or conduct any business except raising capital
        for the institution;

"specified amount" (指明數額), in relation to an authorized institution,
means any amount which the institution is required under section 48(2) to
deduct from its core capital and supplementary capital;

"subsidiary undertaking" (附屬企業) shall be construed in accordance with
section 2B of the Companies Ordinance ( Cap 32) as read with the Twenty-third
Schedule to that Ordinance;

"supplementary capital" (附加資本), in relation to an authorized
institution, means the sum, calculated in Hong Kong dollars, of the
net book values of the institution's capital items specified in section 42.

"available-for-sale" (可供出售)

"cash flow hedge" (現金流對沖)

"connected company" (連繫公司)

"consolidation requirement" (綜合規定)

"core capital" (核心資本)

"debentures" (債權證)

"debt securities" (債務證券)

"financial assets not held for trading purposes"
(非作交易用途的金融資產)

"forecast transaction" (預期交易)

"irredeemable" (不可贖回)

"other regulatory capital instrument" (其他監管資本票據)

"special purpose vehicle" (特定目的工具)

"specified amount" (指明數額)

"subsidiary undertaking" (附屬企業)

"supplementary capital" (附加資本)