Hong Kong Regulations

BANKING (DISCLOSURE) RULES - SECT 74

Capital adequacy

(1) Subject to subsection (2), an authorized institution shall disclose—

   (a)  a summary of the approach it uses to assess the adequacy of its
        capital to support current and future activities; and

   (b)  its capital requirements separately for each IRB class or IRB
        subclass, as the case may be, under the separately disclosed IRB
        calculation approach as specified in section 147 of the Capital Rules
        used by the institution, covering—

        (i)    corporate (including small-and-medium sized corporates,
               specialized lending and purchased corporate receivables),
               sovereign and bank exposures;

        (ii)   residential mortgages to individuals and property-holding shell
               companies (including purchased retail receivables if
               applicable);

        (iii)  qualifying revolving retail exposures (including purchased
               retail receivables if applicable);

        (iv)   other retail exposures to individuals and small business retail
               exposures (including purchased retail receivables if
               applicable); and

        (v)    other exposures including cash items, and other exposures which
               do not fall within the IRB class of corporate, sovereign, bank,
               retail or equity exposures or the IRB subclass of cash items.

(2) For the purposes of a disclosure under subsection (1) by an authorized
institution, the institution shall distinguish between qualifying revolving
retail exposures and other retail exposures to individuals and small business
retail exposures unless—

   (a)  those IRB subclasses are insignificant in size relative to the overall
        credit exposures of the institution; and

   (b)  the risk profiles of those IRB subclasses are so similar that to make
        that distinction would not assist in understanding the risk profile of
        the institution's retail businesses.

(3) An authorized institution shall disclose its capital  requirements for its
securitization exposures.

(4) An authorized institution shall disclose—

   (a)  subject to paragraph (b), its capital requirements for the IRB class
        of equity exposures booked in its banking book; and

   (b)  a breakdown of such equity exposures into—

        (i)    equity exposures subject to the market-based approach further
               broken down into— (A) equity exposures subject to the simple
               risk-weight method; and (B) equity exposures subject to the
               internal models method; and

        (ii)   equity exposures subject to the PD/LGD approach.

(5) An authorized institution shall disclose—

   (a)  its capital charge for market risk calculated in accordance with—

        (i)    the approach it uses under the Capital Rules to calculate its
               market risk; or

        (ii)   the approach it has approval under section 20(2)(a) of the
               Capital Rules to use to calculate its market risk,
as the case requires; and

   (b)  its capital charge for operational risk calculated in accordance with
        the approach it uses under the Capital Rules to calculate its
        operational risk.