Hong Kong increases bank capital levels on credit expansion fears

HKMA is first Asian regulator to implement Basel III counter-cyclical capital buffer as consumer borrowing and concerns over house prices prompt concern


The Hong Kong Monetary Authority (HKMA) has asked banks to hold an extra 0.625% layer of capital from January 2016 after observing an increase in both the credit-to-GDP ratio and the rent-to-price multiple, making Hong Kong the first country in Asia to implement the new Basel III measure.

The Basel III counter-cyclical capital buffer (CCB) provides regulators with an extra tool to protect against pro-cyclicality in the banking system. Credit expansion has outpaced economic growth in Hong Kong so

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