Featured Product

    CBIRC and PBC Proposed Regulations for Systemically Important Banks

    April 06, 2021

    CBIRC and PBC jointly proposed additional supervisory regulations to require systemically important banks to meet certain additional capital requirements. The systemically important banks have been divided into five groups (first to fifth) that are subject to additional capital requirements of 0.25%, 0.5%, 0.75%, 1%, and 1.5%, respectively. The additional leverage requirement is 50% of the additional capital requirement, which is met by tier 1 capital. The draft regulations further specify that PBC and CBIRC will assess the liquidity and large risk exposures of systemically important banks based on the assessment of substantial risks and make recommendations based on the assessment results. The comment period for this proposal ends on May 01, 2021.

    The proposed regulations also specify requirements for recovery and resolution planning for the systemically important banks. The resolution plan would specify how a bank implements the plan to safely, quickly, and effectively dispose of when it is unable to operate continuously to ensure uninterrupted key businesses and services and avoid systemic risks. Banks that enter the list of systemically important banks for the first time shall formulate a group-level recovery and resolution plan and submit this plan by the end of August of the next year. More specifically, systemically important banks shall update the recovery plan every year, update the resolution plan every two years, and submit it to the crisis management team by the end of August. The crisis management team shall provide written opinions within two months of the date of receipt of the recovery and resolution plan. If the recovery and resolution plan is not approved, the systemically important bank shall rectify the plan within the time limit specified by the crisis management team.

    The proposed regulations also highlight that a comprehensive risk management report shall be submitted to CBIRC and PBC each year, covering a comprehensive analysis of the risk status of a bank, evaluation of the effectiveness of its risk prevention and control system, asset quality reports, specific measures to improve risk management, and any other information requested by CBIRC and PBC. The draft regulations also note that, from the perspective of preventing systemic risks, PBC and CBIRC have established a special stress test working group for systemically important banks to set different stress test scenarios, specify stress test models and methods, and conduct regular review. Systemically important banks conduct stress tests to evaluate a bank’s capital planning and capital adequacy, liquidity, large risk exposure, and other risk conditions; test the feasibility of recovery and resolution plans; and propose corresponding measures for systemically important banks based on the results of the regulatory stress test requirements.

     

    Comment Due Date: May 01, 2021

    Keywords: Asia Pacific, China, Banking, Systemic Risk, Too Big to Fail, D-SIBs, Reporting, Regulatory Capital, Leverage Ratio, Recovery and Resolution, Resolution Framework, Stress Testing, Tier 1 Capital, CBIRC, Basel, PBC

    Featured Experts
    Related Articles
    News

    EBA Guide to Monitor Threshold for Intermediate Parent Undertakings

    The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).

    July 28, 2021 WebPage Regulatory News
    News

    PRA Finalizes Approach to Supervision of International Banks

    In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.

    July 26, 2021 WebPage Regulatory News
    News

    FCA Issues PS21/9 on Implementation of Investment Firms Regime

    The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.

    July 26, 2021 WebPage Regulatory News
    News

    EBA Proposes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.

    July 26, 2021 WebPage Regulatory News
    News

    IOSCO Proposes Recommendations on ESG Ratings and Data Providers

    The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.

    July 26, 2021 WebPage Regulatory News
    News

    ESMA Group Issues Recommendations on RFR Switch in Interdealer Market

    The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.

    July 26, 2021 WebPage Regulatory News
    News

    EC to Defer Application of SFDR Standards Till July 2022

    The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.

    July 23, 2021 WebPage Regulatory News
    News

    EIOPA Consults on Reporting and Disclosures Under Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) proposed to amend the supervisory statement on supervision of run-off undertakings that are subject to Solvency II regulation.

    July 23, 2021 WebPage Regulatory News
    News

    BoE Consults on Approach to Setting MREL, Publishes Bail-In Guidance

    The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.

    July 22, 2021 WebPage Regulatory News
    News

    EBA Seeks Views on Proportionality Assessment Methodology

    The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.

    July 22, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7295