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
Related Links (in Chinese)
Keywords: Asia Pacific, China, Banking, Insurance, NPLs, Shadow Banking, ALM, Governance, Systemic Risk, Recovery and Resolution, ESG, CBIRC
Sam leads the quantitative research team within the CreditEdge™ research group. In this role, he develops novel risk and forecasting solutions for financial institutions while providing thought leadership on related trends in global financial markets.
Previous ArticleIFC Publishes Annual Report, Briefs on Work Done in 2019
BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework
PRA published a statement to insurers that clarifies the approach to application of the matching adjustment during COVID-19 crisis.
EBA published a report on the implementation of selected COVID-19 policies within the prudential framework for banking sector.
EC launched a consultation to revise the network and information systems (NIS) Directive (2016/1148), which was adopted in July 2016 and is the first horizontal internal market instrument aimed at improving the resilience of the EU against cybersecurity risks.
PRA published a statement that outlines its view on the implications of LIBOR transition for contracts in scope of the “Contractual Recognition of Bail-In” and “Stay in Resolution” parts of the PRA Rulebook.
PRA published the policy statement PS15/20 to reflect additional resilience associated with higher macro-prudential buffers in a standard risk environment with a reduction in Pillar 2A capital requirements.
BCBS published the eighteenth progress report on implementation of the Basel III regulatory framework in member jurisdictions.
FCA announced proposals that would provide continued support for certain consumer credit products to users, who are facing a financial impact because of the exceptional circumstances arising from the COVID-19 pandemic.
ACPR published a draft version of taxonomy RAN 1.4.0_PWD1, along with the related documentation, for Solvency II reporting.
BCBS amended the guidelines on sound management of risks related to money laundering and financing of terrorism (ML/FT).