On 11 Apr 2025, the HKMA revised SPM Module CR-G-7 on 'Collateral and Guarantees' to address evolving credit complexity, incorporate Basel II reform requirements, and align with FSB mortgage underwriting principles. The updated guidance applies proportionately to authorized institutions, requiring system reviews and implementation within two years of issuance.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction
On 11 Apr 2025, the Hong Kong Monetary Authority (HKMA) issued a revised version of Supervisory Policy Manual (SPM) Module CR-G-7 on 'Collateral and Guarantees', following consultation with industry associations, to update guidance for authorized institutions.
Key Revisions and Purpose
The revisions primarily address the increasing complexity of authorized institutions' credit activities, incorporate property valuation requirements from paragraph 20.75(2) of CRE20 under the Basel II final reform package, and align with the Financial Stability Board's (FSB) 2012 'Principles for Sound Residential Mortgage Underwriting Practices'. These changes amend the existing SPM guidance to reflect updated regulatory expectations.
Implementation and Applicability
The revised guidance will apply proportionately to all authorized institutions based on the nature, scale, complexity, and credit risk profile of their credit activities and risk mitigants. Authorized institutions must review their risk management systems for consistency with the revised guidance and implement necessary changes within two years of the issuance date.
Access and Contact
The revised SPM module is accessible via the HKMA’s Banking Regulatory Document Repository on the public website or the Supervisory Communication Website. Institutions may direct inquiries to credit
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