The Hong Kong Monetary Authority (“HKMA”) published its consultation conclusions on 13 February 2026 regarding proposed enhancements to the Banking Ordinance (Cap. 155 of the laws of Hong Kong) (“BO”), Financial Institutions (Resolution) Ordinance (Cap. 628 of the laws of Hong Kong) (“FIRO”), The Hong Kong Association of Banks Ordinance (Cap. 364 of the laws of Hong Kong) (“HKABO”) and The Hong Kong Association of Banks By-laws (Cap. 364A) (“HKAB By-laws”). The consultation followed the HKMA’s consultation paper issued on 5 December 2024 and closed on 28 January 2025. The HKMA received a total of six submissions: three from industry associations, and one each from a statutory body, a law firm and a member of the public.
The consultation conclusions cover four principal areas, including (i) the statutory regime for bank holding companies, (ii) the engagement of skilled persons and auditors, (iii) various technical amendments to the BO and related legislation, and (iv) an amendment to the FIRO.
(i) Statutory regime for bank holding companies
Respondents generally supported establishing a statutory regime for the regulation and supervision of locally incorporated holding companies of locally incorporated authorized institutions (“AI”s). The HKMA clarified that the proposal would mainly codify the existing supervisory practice in the HKMA’s Supervisory Policy Manual module CS- 1 “Group-wide Approach to Supervision of Locally Incorporated Authorized Institutions”.
Under the proposed framework, the HKMA would be given statutory power to designate a holding company as a designated bank holding company (“DBHC”), generally if it was not already subject to direct or consolidated supervision by the HKMA or another financial authority. The DBHC itself, but not other relevant companies such as a DBHC’s subsidiaries, would be subject to certain prudential and other supervisory requirements, although group companies may be relevant in calculating prudential requirements on a consolidated basis.
(ii) Engagement of skilled persons and auditors
Respondents generally agreed that the HKMA should be given flexibility to appoint, or require AIs to appoint, skilled persons, and to appoint auditors directly where necessary, to assist the HKMA to perform his functions under the BO.
The HKMA clarified that costs would be borne by the HKMA if a skilled person was appointed by the HKMA to assist with his regulatory functions, but the cost (in whole or in part) may be charged to an AI if a skilled person was appointed by the HKMA to prepare a report on an AI for matters such as deficiencies in the AI’s systems and controls. The HKMA further clarified that he would not maintain a pre-approved list of skilled persons, as the required expertise may vary depending on the circumstances. It was also proposed that skilled persons and auditors appointed by the HKMA be subject to official secrecy obligations, but statutory immunity under section 127 of the BO would not be extended to them.
(iii) Technical amendments to the BO and related legislation
Respondents were generally supportive of the proposed technical amendments to the BO, which were intended to reduce compliance burden, improve regulatory clarity and align with international standards. Key proposed changes included reducing the administrative burden for AIs incorporated outside Hong Kong regarding their annual documentary submissions, requiring AIs to notify the HKMA of any material adverse developments to align with the Basel Core Principles, etc.
No specific comments were raised on the proposed amendments to the HKABO and HKAB By-laws – which were intended to deal with redomiciliation of foreign AIs to Hong Kong and general changes bringing the HKABO and HKAB By-laws up to date.
(iv) Amendment to FIRO
Respondents agreed with the proposal to include an express reference to the “public interest” in the conditions for initiating resolution of a “within scope financial institution” under the FIRO. The HKMA stated that the amendment would enhance flexibility in handling crisis scenarios and better align Hong Kong’s resolution framework with other major financial jurisdictions.
The findings and feedback collected during this consultation laid the groundwork for the legislative amendments proposed by the HKMA in May 2026 (view the article here). Proposals regarding the statutory regulation of bank holding companies and the engagement of skilled persons were directly carried forward into the proposed legislative framework.
