Hong Kong may front-run China TLAC requirements

Chinese G-Sibs could be forced to issue in Hong Kong before group TLAC requirements apply

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Material disconnect: with no equivalent TLAC regime in China, it is difficult for HKMA to defer to home rules for subsidiaries of Chinese banks falling under its jurisdiction

The largest Chinese banks may be forced to issue bail-in debt under Hong Kong’s new resolution framework imminently, even though the Financial Stability Board (FSB) has given China an additional six years to comply with the global total loss absorbing capacity (TLAC) framework.

“Loss absorbing capacity requirements can be applied to any authorised institution incorporated in Hong Kong, regardless of whether their foreign parent’s jurisdiction has a resolution regime or not,” says a spokesperson

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