Basel III to be implemented in 2013

No pain, no gain for Hong Kong’s banking industry.

Hong Kong will adopt the tough Basel III banking reforms beginning January 1, 2013. Basel III is a global regulatory standard on bank capital adequacy, stress testing and market liquidity risk agreed upon by the members of the Basel Committee on Banking Supervision in 2010-11.

Developed in response to deficiencies in financial regulation revealed by the “Great Recession of 2008,” Basel III strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage.

The Financial Services & the Treasury Bureau said Basel III's implementation will strengthen the banking system's resilience and competitiveness. Basel III will also keep Hong Kong in line with the latest international regulatory standards.

Hong Kong’s Banking (Amendment) Ordinance 2012 announced recently emplaces a legal framework for the implementation of the banking regulatory reform package released in Basel III.

The ordinance empowers the Monetary Authority to make rules to prescribe the capital, liquidity and disclosure requirements applicable to authorised institutions.

It also seeks to enlarge the review remit of the present Capital Adequacy Review Tribunal to also cover matters related to liquidity and disclosure for Basel III implementation. It will rename CART as the Banking Review Tribunal.