Hong Kong Regulations

BANKING (CAPITAL) RULES - SECT 8

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

(2) Subject to subsection (3) and section 9, the Monetary Authority shall
determine an application under subsection (1) from an authorized institution
by—

   (a)  granting approval to the institution to use the IRB 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 IRB approach to calculate its credit risk for non-securitization exposures
if any one or more of the requirements specified in Schedule 2 applicable to
or in relation to the institution are not satisfied with respect to the
institution.

(4) Where an authorized institution is granted an approval under subsection
(2)(a) to use the IRB approach to calculate its credit risk for
non-securitization exposures—

   (a)  subject to sections 10(5)(a) and 12, the institution shall not, except
        with the prior consent of the Monetary Authority, use any approach
        other than the IRB approach to calculate its credit risk for
        non-securitization exposures; and

   (b)  the institution shall not, without the prior consent of the Monetary
        Authority, make any significant change to any rating system which is
        the subject of the approval.