BANKING
Ord. No. 27/86
A221
A220
Ord. No. 27/86
"eligible Government" means--
(Cap. 32.)
(a) the Government; and
BANKING
(b) any other government, except a government which is, in the opinion of the Commissioner, one that should not be accepted for the purposes of this Schedule;
"guarantee" includes indemnity;
"registered deposit-taking company" does not include any deposit-taking company
the registration of which is for the time being suspended under this Ordinance.
2. The capital adequacy ratio of an authorized institution shall be calculated as the ratio, expressed as a percentage, of its capital base, as specified in paragraph 3, to its risk assets, as specified in paragraph 4.
3.
The capital base of an authorized institution shall be determined by taking the sum, calculated in Hong Kong dollars, of the book value of—
(a) its paid-up capital;
(b) its general reserves, including inner reserves, share premium account and
revaluation reserves;
(c) its undistributed profits as shown in the latest audited accounts, less-
(i) any dividends subsequently declared, or paid, but not provided; and (ii) any net loss for the period since the end of the period covered by the latest audited accounts;
(d) where the Commissioner determines under section 98(2) that the accounts of
the institution are to be on a consolidated basis, its minority interests; and (e) its perpetual subordinated debt, but not exceeding the equivalent of half of
the total of the amounts referred to in sub-paragraphs (a), (b), (c) and (d), and by deducting therefrom the sum, calculated in Hong Kong dollars, of the book value of
(i) its shareholding in any company which is a subsidiary or the holding company of the institution, other than any shareholding that falls to be deducted under sub-paragraph (ii);
(ii) its loans to, shares and debentures issued by, and guarantees of liabilities of, connected companies of the institution, where in the opinion of the Commissioner the institution has made the loans, is holding the shares or debentures or, as the case may be, has given the guarantees, other than in the ordinary course of business; and for the purposes of this sub-paragraph "shares" and "debentures" shall have the meaning assigned to them by section 2 of the Companies Ordinance, and a company shall be treated as a connected company of the institution if it is a subsidiary or the holding company of the institution, or is otherwise of a description falling within section 64(1)(a), (b), (c), (d) or (e); and
(iii) the intangible assets of the institution.
4. The risk assets of an authorized institution shall be the sum of all the products achieved by—
(a) taking the book value, calculated in Hong Kong dollars, of each of the items
referred to in the Table in relation to that institution; and
(b) in relation to each item, multiplying that value by the risk weight specified in
the Table for the category to which that item belongs:
Provided that no item that has been deducted under paragraph 3(1), (ii) or (iii) in calculating the capital base of the institution shall be taken into account for the purposes of this paragraph.
TABLE
Category I-risk weight 0.0
Item
(a)
Nature of item
Government certificates of indebtedness held by the institution for note issue.
(b)
Currency notes and coins held by the institution.
(c)
Gold in any form which is an asset of the institution and which it has contracted to sell to customers.
(d)
Shares, stocks and debt securities which are an asset of the institution and which it has contracted to sell to customers.
(e)
S
(g)
Liabilities of the institution, whether contingent or otherwise, in respect of forward foreign exchange contracts, interest rate swap contracts, currency swap contracts, option contracts and futures contracts. Liabilities of the institution, whether contingent or otherwise, in respect
of-
(i) bills received by the institution for the purpose of the collection of funds;
(ii) letters of guarantee in respect of the import of goods, in relation to which the institution is liable under import bills;
(iii) trust receipts in respect of the movement of goods, in relation to which the institution either has made loans which are outstanding or is liable under letters of credit.
Underwriting commitments of the institution that have subsisted for less than 3 months.
Category II-risk weight 0.2
Item
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Nature of item
Loans made by the institution to eligible banks and eligible govern- ments, being loans that mature or are callable within 1 year and are not subordinated to the claims of ordinary creditors of the borrowers. Debt securities held by the institution that were issued by eligible banks or eligible governments, are redeemable within 1 year and are not subordinated to the claims of ordinary creditors of the issuers. Loans made by the institution that are guaranteed by an eligible bank or eligible government and mature or are callable within 1 year. Debt securities held by the institution that are guaranteed by an eligible bank or eligible government and are redeemable within 1 year. Guarantees given by the institution in respect of the financial liabilities of eligible banks and eligible governments.
Contingent liabilities of the institution that are guaranteed by eligible banks or eligible governments.
Loans by, and contingent liabilities of, the institution that are secured by cash deposits of equivalent value with the institution.
Category III-risk weight 0.5
Item
(a)
Nature of item
Bills, certificates, notes, paper and debt securities held by the institution which-
(i) are negotiable;
(ii) have a remaining term to maturity of not less than 1 year and not more than 10 years; and
(iii) have been issued, guaranteed or accepted by eligible banks or eligible governments.