HKMA likely to miss FSB deadline for crisis management plan

Hong Kong's de facto central bank carries the weight of the financial universe on its shoulders.

Even if the Hong Kong Monetary Authority's domestic banks are minor players in the global market, for its size the city has an almost unmatched concentration of international banking heavyweights within its borders. Twenty-seven out of 30 of the globe's most systemically important banks, as identified by the Financial Stability Board, have branches or subsidiaries here.

HSBC and Standard Chartered, two of the world's biggest banks, call Hong Kong a home away from home. Then there's the mainland's superbanks expanding southward.

These give the HKMA all the more reason to be clear on how it would manage a domestic bank run or a global financial shock that ripples through foreign bank branches. The problem is, the current regulatory fallback is wanting and the HKMA could turn up late as banking regulators the world over make known their strategies for the next global financial crisis.

In accordance with the Financial Stability Board, the HKMA in January issued a consultation paper on what's known as a "resolution regime for financial institutions". The paper sought public comment on the regime and noted it would issue a second paper before the end of the year before tabling the act in the legislature next year.

The HKMA will likely miss that soft deadline. A spokesperson from the regulator told the that it was close to finalising the paper but expected to issue it in January for a three-month consultation period.