CBIRC Clarifies Requirements for Large Risk Exposures of Foreign Banks
CBIRC published a notice on its decision to exempt foreign-funded corporate banks from the regulatory requirements for large-scale risk exposure of parent bank groups. CBIRC made this decision to integrate the current regulatory rules with international standards. The notice also mentions that CBIRC shall strengthen the monitoring of relevant data, make reasonable judgments based on the type of exposure and actual risk of transactions between foreign corporate banks and parent banking groups, and, if necessary, take supervisory measures as required. CBIRC issued the notice to further clarify the relevant regulatory requirements for large risk exposures of foreign banks to the parent bank group within the purview of the implementation of the measures for administration of large risk exposure of commercial banks, which were published by CBIRC in 2018.
CBIRC provides the following clarifications:
- The risk exposure of foreign-funded legal person banks to single inter-bank customers or group customers within the parent bank group is not subject to the regulatory requirements for large risk exposures stipulated in the measures for administration of large exposures.
- All banking and insurance regulatory bureaus shall supervise and urge foreign-funded corporate banks to effectively implement the main responsibilities of risk prevention and control and continue to do a good job in the corresponding risk management of the parent bank group's large risk exposure and the filling of related statements.
- The banking and insurance regulatory bureaus shall strengthen relevant data monitoring, make reasonable judgments based on the types of exposures and actual risk situations of transactions between foreign-funded legal person banks and parent bank groups, and promptly alert banks about abnormal changes or weak risk management capabilities. When necessary, supervisory measures such as conducting prudential discussions and issuing supervisory opinions can be adopted.
- All banking and insurance regulatory bureaus shall strengthen the supervision of related-party transactions, in accordance with relevant regulations, and strictly control the risks of unfair transactions and benefit transmission that may exist in transactions between foreign-funded legal person banks and parent bank groups.
- All banking and insurance regulatory bureaus shall continue to pay attention to the operation and management of the parent bank group of foreign-funded legal person banks, comprehensively consider the changes in the parent bank group's risk, and conduct a dynamic assessment of the risk isolation between the subsidiary bank in China and the parent bank group to prevent cross-border risk contagion.
Related Links (in Chinese)
Keywords: Asia Pacific, China, Banking, Large Exposures, Foreign Banks, Basel, CBIRC
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
EBA Proposes Guidelines to Clarify Certain Aspects of DGSDRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.