Featured Product

    CBIRC and CSRC Revise Guidelines for Preferred Stock Issuance by Banks

    July 19, 2019

    CBIRC and CSRC jointly issued the guidelines on “Commercial Banks’ Issuance of Preferred Stock for Tier-1 Capital Replenishment (Revised).” This would help to further broaden the channels for capital supplementation by commercial banks, thus facilitating increase in capital adequacy level and credit supply by banks. This guidance shall come into force from the date of issuance. Also published were certain questions and answers (Q&As) on the revised guidelines.

    The guidelines stipulate that, for a commercial bank to issue preferred shares, it shall file an application for issuance with CBIRC. The administrative licenses involved in the issuance of preferred shares by commercial banks, such as capital supplements and amendments to the articles of association, shall be accepted, reviewed, and decided by the relevant regulatory authorities in China. After obtaining the approval document from CBIRC, the commercial bank shall file an application for issuance with CSRC. Commercial banks may not issue preferred shares with resale terms. The exercise of redemption rights by commercial banks shall comply with the relevant provisions of the Measures for Capital Management of Commercial Banks (Trial). The guidelines consist of 10 articles and the key revisions include the following:

    • On the precondition that the conditions of issuance and the requirements of prudential regulation are met, unlisted banks with cumulative shareholders exceeding 200 can directly issue preferred stock, without getting listed on the National Equities Exchange and Quotations or NEEQ.
    • Requirements of compliance, equity management, information disclosure, and auditing have been further specified.

    The scope of this revision is for non-listed banks. The large state-owned commercial banks and most of the national joint-stock commercial banks in China are listed banks. Prior to this revision, these banks have been able to issue preferred shares in accordance with the relevant regulations of the State Council, CSRC and CBIRC. Most city commercial banks and rural commercial banks are non-listed banks. According to the Measures for the Supervision and Administration of Unlisted Public Companies, non-listed banks with more than 200 shareholders meet the standards of non-listed public companies. Preferred stocks may be issued directly if the conditions of issuance and prudential regulatory requirements are met. Non-listed banks are mainly small and medium-size banks.

    The revised guidelines can facilitate commercial banks, especially the medium and small ones, to replenish capital via multiple channels and help unlisted banks to raise their capital adequacy levels. It can also promote commercial banks to further strengthen financial support to the private-owned, micro, and small enterprises and better serve the real economy.

     

    Related Links

    Effective Date: July 19, 2019

    Keywords: Asia Pacific, China, Banking, Securities, Preferred Stock, Tier 1 Capital, Q&A, Capital Adequacy, Disclosure, Guidelines, CBIRC, CSRC

    Featured Experts
    Related Articles
    News

    EBA Publishes Standards on Disclosure of Investment Policy Under IFR

    The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).

    October 19, 2021 WebPage Regulatory News
    News

    EBA Updates Filing Rules for Supervisory Reporting

    The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    APRA Finalizes Guidance for New Prudential Standard on Remuneration

    The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.

    October 18, 2021 WebPage Regulatory News
    News

    OCC Updated LIBOR Self-Assessment Tool for Banks

    The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).

    October 18, 2021 WebPage Regulatory News
    News

    TCFD Updates Guidance for Financial Disclosures on Climate Risk

    The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

    October 14, 2021 WebPage Regulatory News
    News

    BCBS Report Examines Progress on Adoption of Basel III Framework

    The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.

    October 14, 2021 WebPage Regulatory News
    News

    ACPR Implements Updates Related to DPM Version 3.1

    The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.

    October 14, 2021 WebPage Regulatory News
    News

    EBA Note Examines Transition Risks of Benchmark Rates

    The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.

    October 14, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7571