CBIRC published a statement on the 2020 National Banking and Insurance Industry Supervision and Management Conference. The statement also highlights the focus areas for CBIRC for 2020. Key work areas will involve addressing of issues related to shadow banking, strengthening of asset and liability management, improving the recovery and resolution framework, identifying the domestically important financial institutions, and development of green finance.
In the meeting, it was highlighted that progress has been made in preventing and tackling financial risks. Reforms in the areas relating to key institutions have continued to deepen while corporate governance mechanisms have been further improved. It was emphasized that in 2020 the “Thirteenth Five-Year Plan” will be completed. CBIRC published questions and answers (Q&As) related to the supervision and management conference. The discussions covered the progress in the area of nonperforming loans (NPLs). Approximately CNY 2 trillion in NPLs were disposed of in 2019. All loans that were overdue for more than 90 days by commercial banks were included in non-performing asset management. Shadow banking and cross-financial risks continue to converge. Over the past three years, the size of shadow banking has dropped by CNY 16 trillion from its historical peak. Problematic financial institutions have been dealt with in an orderly manner and key risks in the insurance field have been alleviated.
In 2020, the key areas of work will include the following:
- Continued dismantling of shadow banking, particularly reduction in the high-risk shadow banking business to prevent resurgence
- Effectively prevention and mitigation of the risks of external shocks, work on stress testing for banking and insurance institutions, and improvement in response plans
- Introduction of measures for supervision and evaluation of financial services for small and micro enterprises in commercial banks (comprehensive financing cost of inclusive small and micro enterprises to be reduced by another 0.5 percentage points)
- Improvements to the equity structure and encouragement for domestic and overseas professional institutions with prominent main businesses, advanced management, and excellent records to invest in Chinese banks and insurance companies
- Comprehensive strengthening of the supervision of asset and liability quality (Based on the existing five-level classification, refine the classification rules and improve the accuracy of asset classification. Regulations on the quality of liabilities should be formulated to improve the stability and matching of liabilities of bancassurance institutions, especially small and medium-size institutions.)
- Strengthening of the recovery and resolution mechanism of bancassurance institutions and closely working with relevant departments to determine the list of domestically important financial institutions
- Development of green finance and launch of a number of financial products that are conducive to environmental protection
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Keywords: Asia Pacific, China, Banking, Insurance, NPLs, Shadow Banking, ALM, Governance, Systemic Risk, Recovery and Resolution, ESG, CBIRC
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
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