On 19 March 2010, the Hong Kong Monetary Authority (HKMA) released the final version of its Guideline on a Sound Remuneration System (Guideline). A draft of the Guideline was released for consultation in October 2009. The Guideline is intended to implement the remuneration principles and practices laid down by the Financial Stability Board, an organisation with membership from the most significant worldwide economies, in the wake of recent global economic instability.
The Guideline applies to all “authorised institutions” (AIs) operating in Hong Kong, including retail banks, merchant and commercial banks and deposit-taking institutions such as consumer finance and securities companies. The HKMA expects all AIs to comply with the Guideline within calendar year 2010. Non-adherence with the Guideline, and any resulting unsatisfactory risk management exposures identified, could adversely impact on an AI’s soundness rating, and in relation to local AIs, could result in an order to hold additional capital to cover those identified exposures.
Source: Baker & McKenzie
Paul Arkwright
Publisher
