Hong Kong Regulations

BANKING (DISCLOSURE) RULES - SECT 45

Capital structure and adequacy

(1) An authorized institution shall disclose a summary of the terms and
conditions of the main features of all regulatory capital instruments issued
by the institution, in particular in the case of innovative, complex or hybrid
capital instruments.

(2) An authorized institution shall disclose the components of its capital
base set out in the returns relating to capital adequacy it submitted to the
Monetary Authority pursuant to section 63 of the Ordinance in respect of the
annual reporting period.

(3) Without prejudice to the generality of subsection (2), the disclosure
referred to in that subsection required of an authorized institution shall
include—

   (a)  in the case of the institution's core capital—

        (i)    the institution's paid-up ordinary share capital;

        (ii)   the institution's paid-up irredeemable non-cumulative
               preference shares;

        (iii)  the amount standing to the credit of the institution's share
               premium account;

        (iv)   the institution's published reserves;

        (v)    the amount of the institution's profit and loss account;

        (vi)   minority interests in the equity of the institution's
               subsidiaries which are included in the institution's core
               capital; and

        (vii)  the total deductions from the institution's core capital;

   (b)  in the case of the institution's supplementary capital—

        (i)    the institution's reserves which are attributable to fair value
               gains on the revaluation of its holdings of land and buildings;

        (ii)   the institution's reserves which are attributable to fair value
               gains on the revaluation of its holdings of available-for-sale
               equities and debt securities (after netting of any overall
               deficit required to be deducted from the institution's
               supplementary capital under section 44(3) of the Capital
               Rules);

        (iii)  the institution's fair value gains arising from its holdings of
               equities and debt securities designated at fair value through
               profit or loss included in the institution's supplementary
               capital;

        (iv)   the amount of the institution's regulatory reserve for general
               banking risks;

        (v)    the amount of the institution's collective provisions;

        (vi)   the amount of the institution's surplus provisions;

        (vii)  the institution's perpetual subordinated debt;

        (viii) the institution's paid-up irredeemable cumulative preference
               shares;

        (ix)   the institution's term subordinated debt;

        (x)    the institution's paid-up term preference shares; and

        (xi)   minority interests in— (A) the paid-up irredeemable
               non-cumulative preference shares of the institution's
               subsidiaries (being special purpose vehicles) in excess of the
               amount included in the institution's core capital which are
               included in the institution's supplementary capital; and (B)
               the paid-up irredeemable cumulative preference shares and
               paid-up term preference shares of the institution's
               subsidiaries which are included in the institution's
               supplementary capital;

   (c)  the total deductions from the institution's core capital and
        supplementary capital;

   (d)  the institution's core capital after deductions;

   (e)  the institution's supplementary capital after deductions; and

   (f)  the institution's capital base.

(4) An authorized institution shall disclose—

   (a)  the total amount of any relevant capital shortfall in any of its
        subsidiaries which are not included in its consolidation group for
        regulatory purposes; and

   (b)  the names of its subsidiaries which are not included in its
        consolidation group.

(5) Subject to subsections (6) and (7), an authorized institution shall
disclose—

   (a)  its capital adequacy ratio; and

   (b)  its core capital ratio.

(6) Where an authorized institution is required under section 98(2) of the
Ordinance as read with Part 2 of the Capital Rules to calculate its capital
adequacy ratio on a consolidated basis, the institution shall disclose—

   (a)  its capital adequacy ratio on a consolidated basis; and

   (b)  its core capital ratio.

(7) Where subsection (6) does not apply to an authorized institution, the
institution shall disclose—

   (a)  its capital adequacy ratio on a solo basis; and

   (b)  its core capital ratio.

(8) Where an authorized institution has earmarked part of its retained
earnings for maintaining its regulatory reserve to satisfy the provisions of
the Ordinance for prudential supervision purposes, the institution shall
disclose—

   (a)  this fact; and

   (b)  the amount of retained earnings so earmarked.

(9) In this section—

"core capital ratio" (核心資本比率), in relation to an authorized
institution, means the ratio, expressed as a percentage, of the amount of the
institution's core capital after making the deductions therefrom required by
Part 3 of the Capital Rules, to the sum of, subject to sections 29, 30 and 31
of the Capital Rules, the institution's risk-weighted amount for credit risk,
risk-weighted amount for market risk and risk-weighted amount for operational
risk as determined in accordance with the Capital Rules;

"relevant capital shortfall" (有關資本短欠), in relation to a subsidiary
of an authorized institution—

   (a)  which is a securities firm or insurance firm; and

   (b)  which is not the subject of a consolidation requirement imposed on the
        institution, means that amount which is deducted from the
        institution's core capital and supplementary capital pursuant to
        section 48(2)(h) of the Capital Rules.

"core capital ratio" (核心資本比率)

"relevant capital shortfall" (有關資本短欠)