The Hong Kong Monetary Authority has completed its annual assessment of Domestic Systemically Important Authorized Institutions and confirmed that the designated list is unchanged from the list published on 31 December 2024. Higher Loss Absorbency requirements applicable to the designated institutions are also unchanged. Under Hong Kong’s D-SIB framework, each designated institution must incorporate a Higher Loss Absorbency requirement into its regulatory capital buffer calculation within 12 months of formal notification of designation. The Higher Loss Absorbency requirement is set as a Common Equity Tier 1 capital ratio add-on (under the Banking (Capital) Rules) ranging from 1% to 3.5% depending on assessed systemic importance, with the framework structured into five buckets and only the 1% to 2.5% buckets populated so far. The Higher Loss Absorbency buffer extends the Basel III Capital Conservation Buffer (together with the Countercyclical Capital Buffer), triggering restrictions on discretionary distributions if a D-SIB’s Common Equity Tier 1 ratio falls within the extended buffer range.
Hong Kong Monetary Authority 2025-12-31
Hong Kong Monetary Authority maintains unchanged list of domestic systemically important authorized institutions and their higher loss absorbency buffers
The Hong Kong Monetary Authority completed its annual assessment of Domestic Systemically Important Authorized Institutions, confirming no changes to the designated list or Higher Loss Absorbency requirements. Under Hong Kong’s D-SIB framework, these institutions must integrate a Higher Loss Absorbency requirement of 1% to 3.5% into their regulatory capital buffer, extending the Basel III Capital Conservation Buffer and imposing restrictions on discretionary distributions if the Common Equity Tier 1 ratio falls within the extended buffer range.