Hong Kong Regulations

BANKING (CAPITAL) RULES - SECT 9

Circumstances in which Monetary Authority shall take into account assessment outside Hong Kong of rating system used by authorized institution

(1) Where—

   (a)  an authorized institution uses a rating system which has been used by
        a bank incorporated outside Hong Kong to calculate the institution's
        credit risk for non-securitization exposures; and

   (b)  the bank is a member of a group of companies of which the institution
        is also a member, the Monetary Authority shall, for the purposes of
        Schedule 2, take into account, insofar as is practicable and
        reasonable in all the circumstances of the case—

   (c)  subject to subsection (2), the assessment of the relevant banking
        supervisory authority of the bank as to the accuracy, verifiability,
        internal consistency and integrity of the rating system; and

   (d)  the appropriateness of the rating system for the purposes of assessing
        the credit risk characteristics of the institution's exposures.

(2) The Monetary Authority shall take into account the assessment referred to
in subsection (1)(c) if, and only if, the Monetary Authority is satisfied that
the capital adequacy standards adopted by the relevant banking supervisory
authority for assessing credit risk under the IRB  approach are not materially
different from those set out in Part 6 and Schedule 2.