Hong Kong Regulations

BANKING (CAPITAL) RULES - SECT 6

Authorized institution may apply for approval to use BSC approach to calculate its credit risk for non-securitization exposures

(1) An authorized institution may apply to the Monetary Authority for approval
to use the BSC approach to calculate its credit risk for
non-securitization exposures.

(2) Subject to subsection (3), the Monetary Authority shall determine an
application under subsection (1) from an authorized institution by—

   (a)  granting approval to the institution to use the BSC approach to
        calculate its credit risk for non-securitization exposures; or

   (b)  refusing to grant the approval.

(3) Without prejudice to the generality of subsection (2)(b), the Monetary
Authority shall refuse to grant approval to an authorized institution to use
the BSC approach to calculate its credit risk for non-securitization exposures
if any one or more of the requirements specified in section 7(a) or (b) are
not satisfied with respect to the institution.

(4) Where an authorized institution is granted an approval under subsection
(2)(a) to use the BSC approach on the ground specified in section 7(b)—

   (a)  if the institution has obtained the prior consent of the Monetary
        Authority, the institution may, before it uses the IRB approach to
        calculate its credit risk for non-securitization exposures, use a
        combination of the STC approach and BSC approach to calculate its
        credit  risk for non-securitization exposures during the
        transitional period; and

   (b)  subject to section 10(5)(a), the institution shall, not later than the
        expiration of the transitional period—

        (i)    use the STC approach to calculate its credit risk for
               non-securitization exposures to which an exemption under
               section 12(2)(a) relates;

        (ii)   use the IRB approach to calculate its credit risk for all other
               non-securitization exposures.