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On 11 April 2025, the Hong Kong Monetary Authority (HKMA) issued a circular announcing the release of the revised Supervisory Policy Manual module (SPM CR-G-7), which sets out updated requirements for the management of collateral and guarantees.
All banks are expected to review and, where necessary, enhance their existing risk management frameworks to ensure alignment with the updated guidance. Any required enhancements or adjustments must be completed within two years of the revision, with full compliance expected by 10 April 2027.
Key enhancements under the revised SPM CR-G-7 include:
- Updates to policies and procedures for collateral and guarantees management
- Revisions to loan-to-value ratios, margin levels, haircuts and concentration limits
- Enhancements in credit approval and credit risk mitigation processes
- Strengthened requirements for collateral valuation
- Expanded monitoring and management information requirements
- New implications for internal control and governance arrangements
All banks are encouraged to stay informed of these regulatory developments, conduct a comprehensive assessment of the revised collateral and guarantee requirements in the context of their existing frameworks, and consider practical measures for enhancement.
Stay ahead of regulatory change with EY’s latest insights on HKMA’s revised collateral and guarantee requirements. This publication examines key challenges, outlines practical considerations and introduces our integrated suite of services to help banks achieve timely compliance.