Credit Risk Management

ECF on Credit Risk Management

Overview

With the aim of supporting capacity building and talent development for banking professionals, the Hong Kong Monetary Authority (HKMA) has been working together with the banking industry to introduce an industry-wide competency framework - “Enhanced Competency Framework (ECF) for Banking Practitioners” in Hong Kong.
The Enhanced Competency Framework on Credit Risk Management (hereinafter referred to as “ECF on CRM”) is a non-statutory framework which sets out the common core competences required of credit risk management practitioners in the Hong Kong banking industry.  The objectives of the ECF on CRM are twofold: 
(a)    To develop a sustainable talent pool of credit risk management practitioners for the banking industry; AND

(b)    To raise and maintain the professional competence of credit risk management practitioners in the banking industry

Although the ECF-CRM is not a mandatory licensing regime, AIs are encouraged to adopt it for purposes including but not limited to:

(a)    using the ECF-CRM as a benchmark to determine the level of competence required and assess the ongoing competence of individual employees;

(b)    supporting relevant employees to attend training programmes and examinations that meet the ECF-CRM benchmark;

(c)    supporting the continuing professional development of individual employees; and

(d)    promoting the ECF-CRM as an industry-recognised qualification including for recruitment purposes.

Please refer to the HKMA Circular on “Enhanced Competency Framework on Credit Risk Management” for details.

 
Scope of Application

The ECF on CRM applies to ‘Relevant Practitioners’ (RPs), i.e. persons engaged by AIs undertaking commercial credit business for corporations ranging from large corporates to small and medium-sized enterprises in a variety of industry sectors including financial institutions (e.g. banks, licensed corporations, brokerage firms, etc.).  The ECF-CRM covers RPs located in the Hong Kong office of an AI and performing the credit function in both the front office and middle office in Hong Kong, regardless of the booking location, up to the person-in-charge of credit department.

Details of the respective roles are classified by a two-level qualification structure namely Core Level and Professional Level. Please refer to the HKMA’s “Guide to Enhanced Competency Framework on Credit Risk Management” for details.

Competency Standards and Syllabus

The competency standards of ECF on CRM are set at two levels: 

(a)    Core level - applicable to entry-level and junior level staff in the credit function.

(b)    Professional level - applicable to staff taking up middle or senior positions in the credit function.

Qualification 

A core level training certificate would be awarded to candidates who have successfully completed all the 3 core level training modules (Module 1 to 3) and obtained a pass at the relevant examination of each module. 

A professional level training certificate would be awarded to candidates who have successfully completed one of the professional level training modules (Module 4 or 5) and obtained a pass at the relevant examination of the module on top of the Core Level qualification.

Certification

RPs may apply to HKIB for certification as Associate Credit Risk Management Professional (ACRP), Certified Credit Risk Management Professional (Commercial Lending) (CCRP(CL)) or Certified Credit Risk Management Professional (Credit Portfolio Management) (CCRP(CPM)) under the following conditions:

(a)    ACRP – A RP may apply to the HKIB for the certification if he or she (1) has completed the training modules M1 to M3 and passed the relevant examinations for the Core Level plus one-year relevant working experience or (2) has been grandfathered. The one-year relevant work experience should be accumulated within the three years immediately prior to the date of application for certification, but does not need to be continuous.

(b)    CCRP(CL) - A RP may apply to the HKIB for the certification if he or she (1) has completed the training module M4 and passed the relevant examination for the Professional Level on top of the Core Level qualification plus five-year relevant working experience or (2) has been grandfathered. The five-year relevant work experience should be accumulated within the ten years immediately prior to the date of application for certification, but does not need to be continuous.

(c)    CCRP(CPM) - A RP may apply to the HKIB for the certification if he or she (1) has completed the training module M5 and passed the relevant examination for the Professional Level on top of the Core Level qualification plus five-year relevant working experience or (2) has been grandfathered.  The five-year relevant work experience should be accumulated within the ten years immediately prior to the date of application for certification, but does not need to be continuous.

(1)    Training and Examinations

Core Level 
The Core Level training programme of the ECF on CRM consists of 3 modules, providing the entry-level and junior level staff in the credit function with technical skills and professional knowledge and conduct in credit risk management. 

Eligible candidates may apply for exemption from completing individual training module. 

Professional Level
The Professional Level training programme of the ECF on CRM is applicable to staff taking up middle or senior positions in the credit function. This level of qualification can be met by completing either Module 4 or Module 5 on top of the Core Level qualification. 

Detailed information of the training programmes and examinations will be available in due course.

(2) Grandfathering

A RP may be grandfathered on a one-off basis based on his or her years of qualifying work experience and/or professional qualification. Such work experience need not be continuous. The detailed grandfathering requirements are as follows:

a) Core Level:
•  Possessing at least 3 years of relevant work experience in any of the functions in credit initiation, evaluation, approval and review and/or credit risk management and control as specified in Annex 1 of the HKMA’s “Guide to Enhanced Competency Framework on Credit Risk Management”; and
•  Employed by an AI at the time of application.

b) Professional Level via Path (i) or Path (ii):
Path (i):
•  Possessing at least 8 years of relevant work experience in any of the functions in credit initiation, evaluation, approval and review and/or credit risk management and control, of which at least 5 years are gained from Professional Level job roles, as specified in Annex 1 of the HKMA’s “Guide to Enhanced Competency Framework on Credit Risk Management”; and
•  Employed by an AI at the time of application.

OR

Path (ii):
• Completion of HKIB’s Postgraduate Diploma for Certified Banker (Credit Management Stream); and
•  Possessing at least 3 years of relevant work experience in any of the functions in credit initiation, evaluation, approval and review and/or credit risk management and control as specified in Annex 1 of the HKMA’s “Guide to Enhanced Competency Framework on Credit Risk Management”; and
•  Employed by an AI at the time of application.

Relevant work experience may be obtained from the banking industry and/or other related financial sectors.

Existing RPs meeting the above criteria can submit their grandfathering applications from 1 October 2019 to 30 September 2020.  A one-off grandfathering fee will apply. The grandfathering application form will be available in September 2019.

Annual Renewal

Certification of ACRP, CCRP(CL) and CCRP(CPM) is subject to annual renewal by HKIB.  ACRP, CCRP(CL) and CCRP(CPM) certification holders are required to meet the annual Continuing Professional Development (CPD) requirements and pay an annual certification fee to renew their ECF on CRM certification. For details, please refer to CPD Requirements section below.

CPD Requirements

For all the ACRP, CCRP(CL) and CCRP(CPM) certifications, a minimum of 15 CPD hours is required for each calendar year (ending 31 December). Any excess CPD hours accumulated within a particular year cannot be carried forward to the following year.

At least 5 CPD hours out of the 15 CPD hours must be earned from activities related to topics of compliance, code of conduct, professional ethics or risk management.   

CPD training topics should be related to banking and finance or the job function: 
(a)    compliance, code of conduct, professional ethics or risk management (e.g. topics related to jurisdiction, structure, collateral and regulatory changes)
(b)    banking and financial knowledge
(c)    economics
(d)    accounting
(e)    legal principles
(f)    business and people management
(g)    language and information technology
(h)    subject areas covered in HKIB professional examinations

No CPD is required in the year when the ACRP, CCRP(CL) or CCRP(CPM) Certification is granted. The CPD requirement starts in the following calendar year.

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