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The amended bill that will enable Hong Kong to implement the revised international capital adequacy framework the Basel Committee on Banking Supervision announced last June will be gazetted on March 4 and tabled in Legislative Council on April 6.
In particular, the Banking (Amendment) Bill proposes that locally incorporated authorised institutions' capital adequacy ratio shall be calculated, and information on financial affairs shall be disclosed, in a manner according to rules the Monetary Authority prescribes under the Banking Ordinance.
These rules will be developed based on the Basel II requirements and have the status of subsidiary legislation.
Proposals aim to enhance ordinance
The bill also contains proposals to enhance the operation of individual provisions of the ordinance. They include:
*confining the liability of an authorised institution's manager to cases where contravention results from an act or omission on the part of the manager or of a person under his control;
*expressly providing that the Monetary Authority may disclose certain details of disciplinary action taken against a relevant individual who is engaged in securities business on behalf of an authorised institution; and
*extending the ceiling of the minimum ceiling adequacy ratio of licensed banks from 12% to 16%.
Boost banking safety, stability
The authority's Deputy Chief Executive William Ryback said with greater risk sensitivity and inclusion of a wider range of risks, Basel II will strengthen the safety and stability of the banking sector, and the Bill will provide express statutory backing for its implementation in Hong Kong.
"In developing the Bill and the Basel II implementation plans, the authority has been guided by a Basel II consultation group that includes representatives from the banking industry, the accounting profession and other experts," Mr Ryback said.
"The bill and the Basel II implementation proposals have also been the subject of full consultation with other interested parties," he said.
Implementation by end-2006
Mr Ryback pledged the authority will continue to work closely with the banking industry to ensure the implementation of the Basel II requirements in Hong Kong in accordance with the Basel timetable, by the end of 2006.
The authority plans to complete the drafting of the detailed capital rules and disclosure rules in consultation with the industry by the end of this year to help authorised institutions prepare early for the implementation of the revised capital adequacy framework.
A fuller description of the bill may be found in the brief issued to the Legislative Council, a copy of which will be made available at the authority's website, along with the gazetted bill. A summary of the consultation comments on the bill and the authority's responses is available here.
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