Hong Kong Monetary Authority drops Bank of East Asia from D-SIB list

Hong Kong Monetary Authority removed The Bank of East Asia Ltd. from its list of domestic systemically important authorized institutions, or D-SIBs, following completion of its annual assessment.

The city's de facto central bank said it considered Bank of East Asia's systemic importance relative to other institutions in its decision. Its assessment took into account the size, interconnectedness, substitutability and complexity of authorized institutions.

The total number of D-SIBs decreased to five from six, effective Jan. 1, 2022, according to Dec. 24 news release.

The Hongkong and Shanghai Banking Corporation Ltd., Bank of China (Hong Kong) Ltd., Standard Chartered Bank (Hong Kong) Ltd., Hang Seng Bank Ltd. and Industrial and Commercial Bank of China (Asia) Ltd. were retained on the list.

D-SIBs are banks subject to additional regulatory and supervisory measures as their impact could cause significant disruption to the financial system and the economy in the event of distress or failure.

Under the regulatory framework, D-SIBs are required to include a higher loss absorbency, or HLA, requirement into the calculation of its regulatory capital buffers within 12 months after the formal notification of its designation.

There is no change to the HLA requirements applied to five other designated D-SIBs, according to the release.