Hong Kong Regulations

BANKING (CAPITAL) RULES - SECT 44

Provisions supplementary to section 42(1)(b)

(1) An authorized institution shall not include in its supplementary capital
more than 45% of any fair value gains referred to in section 42(1)(b).

(2) An authorized institution—

   (a)  shall deduct from its core capital—

        (i)    cumulative unrealized losses of the institution— (A) which
               arise from the institution's holdings of available-for-sale
               equities and debt securities; and (B) which fall below the cost
               of those securities; and

        (ii)   impairment losses in respect of the institution's holdings of
               available-for-sale equities and debt securities; and

   (b)  shall not, for the purposes of paragraph (a)(ii), set-off any
        impairment losses in respect of securities referred to in that
        paragraph against any unrealized gains in respect of those securities.

(3) An authorized institution shall deduct from its supplementary  capital any
overall deficit arising from the revaluation of its holdings of
available-for-sale equities and debt securities falling within section  42
(1)(b)(i) (but excluding any losses falling within subsection (2)(a)).