Hong Kong Banks Ready For Basel II

by Mary Swire, for LawAndTax-News.com, Hong Kong

04 December 2006

Hong Kong Monetary Authority Deputy Chief Executive, Willliam Ryback announced last week that the jurisdiction's banking sector is ready to implement Basel II's requirements, adding that the new standards, effective on January 1, will benefit Hong Kong's banking industry and businesses.

Lawmakers in the SAR have completed the negative vetting of the Banking (Capital) and Banking (Disclosure) Rules - the subsidiary laws prescribing how the capital-adequacy ratio of locally incorporated authorised institutions should be calculated, and what information on the state of affairs, profit and loss and capital-adequacy ratio should be publicly disclosed by authorised institutions.

Two resolutions containing minor refinements to the rules were gazetted on Friday. The resolutions seek to improve the rules' clarity, by introducing or revising definitions of certain terms, and achieve consistency in the terminology used in the rules.

The revised rules will come into force at the start of next year.

"It is very satisfying that all of the necessary legislation to allow Basel II to be implemented in Hong Kong is now in place. Driving the development of Basel II has been the belief that it will benefit the banking industry and benefit business in Hong Kong. As we now move into the implementation phase, our focus will be on ensuring that these benefits are realised," Mr Ryback concluded.

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