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Exposure Draft on Transitional Arrangements for Regulatory Capital Treatment of Accounting Provisions

Release Date: 28 Sep 2020

This Exposure Draft sets out the Bank’s proposals on the transitional arrangements for regulatory capital treatment of accounting provisions. Banking institutions which elect to apply the transitional arrangements are allowed to add back a portion of the Stage 1 and Stage 2 provisions for expected credit losses (ECL) to Common Equity Tier 1 Capital over a four-year period from financial year beginning 2020 or a three-year period from financial year beginning 2021. The proposals are consistent with the guidance issued by the Basel Committee of Banking Supervision on “Regulatory treatment of accounting provisions – interim approach and transitional arrangement” (March 2017) and “Measures to reflect the impact of Covid-19” (April 2020).

The Bank invites written feedback on the proposals in this Exposure Draft, including suggestions on areas to be clarified and alternative proposals that the Bank should consider. The written feedback should be supported with clear rationale, including accompanying evidence or illustration where appropriate, to facilitate an effective consultation process.

Responses must be submitted to the Bank by 23 October 2020.

See more:

  1. Transitional Arrangements for Regulatory Capital Treatment of Accounting Provisions Exposure Draft
  2. Attachment 1: Impact analysis template

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