Hong Kong Regulations

BANKING (CAPITAL) RULES - SECT 84

Calculation of risk-weighted amount of off-balance sheet exposures other than OTC derivative transactions

An authorized institution shall calculate the risk-weighted amount of each of
its off-balance sheet exposures which is not an OTC derivative  transaction
by—

   (a)  dividing the principal amount of the exposure, net of specific 
        provisions, into—

        (i)    the credit protection covered portion; and

        (ii)   the credit protection uncovered portion;

   (b)  multiplying the credit protection covered portion and the
        credit protection uncovered portion by the CCF applicable to the
        off-balance sheet exposure to produce 2 credit equivalent amounts;

   (c)  multiplying the credit equivalent amount of the credit 
        protection covered portion by the risk-weight attributable to the
        recognized collateral and multiplying the credit equivalent amount of
        the credit protection uncovered portion by the risk-weight
        attributable to the exposure; and

   (d)  adding together the 2 products derived from the application of
        paragraph (c).