On 10 Apr 2025, the HKMA published the Glossary (GL) module of its Supervisory Policy Manual, standardizing definitions of regulatory terms and abbreviations to ensure consistent application across the HKMA’s framework. The document clarifies critical concepts including 'Capital base,' 'Controller,' 'Risk concentration,' and the distinction between statutory guidelines and non-statutory guidance, emphasizing that non-compliance with statutory standards may impact authorization status.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction
On 10 Apr 2025, the Hong Kong Monetary Authority (HKMA) published the Glossary (GL) module of its Supervisory Policy Manual, providing standardized definitions of key terms and abbreviations used throughout the regulatory framework to ensure consistent interpretation and application of supervisory requirements.
Document Purpose and Scope
The GL module serves as a reference tool for financial institutions and HKMA staff, defining abbreviations (e.g., FATF, HKMA, HKSARG) and critical regulatory terms (e.g., 'Capital base,' 'Controller,' 'Risk concentration') as used in the Supervisory Policy Manual. It clarifies that terms like 'Controller' encompass indirect, minority shareholder, and majority shareholder controllers under the Banking Ordinance, while 'Capital base' is defined differently for Hong Kong-incorporated banks versus those operating under Basel frameworks.
Key Regulatory Terminology
The glossary explicitly distinguishes between statutory guidelines (minimum standards under the Banking Ordinance) and non-statutory guidance (e.g., Guidance Notes and Technical Notes), noting that failure to adhere to statutory guidelines may question an institution’s authorization compliance. It defines core concepts including 'Non-performing loan' (interest placed in suspense or accrual ceased), 'Large exposure' (≥10% of Tier 1 capital), and 'Risk-adjusted return' (net revenue adjusted for credit risk), with specific methodologies for calculation where internal systems are insufficient.
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