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All individual authorised institutions' capital adequacy ratios at the end of December were above the statutory minimum ratios, the Monetary Authority says. The aggregate capital adequacy ratio was very strong at 13.65%.
The authority today said all 72 Hong Kong incorporated authorised institutions reported their capital adequacy positions under the newly implemented revised capital adequacy framework set out in the Banking (Capital) Rules, which took effect on January 1.
The new framework represents a major advance on the previous one, in that it is more risk-sensitive and it requires that capital be held against a wider range of risks.
Authorised institutions are also given greater flexibility on how they calculate their risk, and are permitted, providing stringent qualifying criteria are met, to make use of internal models to calculate their risk.
The authority's Executive Director (Banking Policy) Simon Topping said Hong Kong institutions are among the first in the world to have implemented this new more advanced capital adequacy framework.
"Hong Kong authorised institutions' adoption of the more advanced risk management techniques underlying the new framework will put them in a good position to make the most of the growing business opportunities presented by Hong Kong's increasing financial integration with the Mainland and increasing importance as a regional and international financial centre."
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