CBIRC and PBC jointly issued measures for the assessment and identification of systemically important banks (SIBs) in China. The measures specify the method, scope, and procedures for this assessment and establish a four-dimensional assessment indicator system of systemic banks, with focus on size, correlation, substitutability, and complexity. In specific assessment processes, data reporting templates and instructions will be sent to banks that participate in the assessment, with a view to collecting the data for assessment. In the future, work will begin on formulating additional regulatory requirements that are to be imposed on the identified systemically important banks.
As per the stipulated process, quantitative assessment indicators will be used to calculate the systemic importance score of banks that participate in the assessment; those scoring as high as 100 will be included in the initial list of systemically important banks. Then, regulatory judgment will be made after taking other quantitative and qualitative information into consideration to comprehensively assess the systemic importance of the banks. For this exercise, the data of participating banks will be collected and analyzed, post which the initial list of systemically important banks will be proposed. The scope of participating banks is to be determined every year. Finally, any necessary adjustments will be made to the initial list based on supervisory judgments. The final list of systemically important banks will be confirmed by the Financial Stability and Development Committee (FSDC) of the State Council and jointly released by PBC and CBIRC.
Going forward, PBC will work with CBIRC to formulate additional regulatory requirements for systemically important banks in China. The regulatory requirements are expected to be imposed on systemically important banks with regard to metrics such as additional capital, leverage ratio, large exposure, corporate governance, recovery and resolution plans, information disclosure, and data reporting. Moreover, measures will be taken to establish an early correction mechanism to motivate systemically important banks to reduce complexity and systemic risks, establish and improve a sound internal capital constraint mechanism to strengthen banks’ capacity of guarding against risks and absorbing losses, and enhance their self-rescue capability to prevent the “too big to fail” risks. For systemically important banks of different groups and types, targeted policies, as well as differentiated schemes for additional regulation, will be implemented based on their operational characteristics and systemic risks. Meanwhile, a reasonable transition period will be arranged to ensure that the policies produce neutral effects and are implemented in a sound and orderly manner.
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Keywords: Asia Pacific, China, Banking, Systemic Risk, Too Big to Fail, Q&A, D-SIBs, Reporting, CBIRC, PBC
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