PBC published "Trial Measures" on supervision and management of financial holding companies in China. The deadline for comments on this consultation is August 24, 2019. These measures have been formulated to regulate the behavior of financial holding companies, strengthen the supervision and management of financial holding companies established by non-financial enterprises, and prevent systemic financial risks.
The Measures define financial holding companies as entities that are legally established and have substantial control over two or more different types of financial institutions. As per PBC, according to the business function attributes, financial institutions include commercial banks (excluding rural banks), financial leasing companies, trust companies, financial asset management companies, securities companies, fund management companies, futures companies, life insurance companies, property insurance companies, reinsurance companies, insurance asset management companies, other financial institutions recognized by the financial management department. PBC will supervise financial holding companies provided that these companies meet certain conditions prescribed under these Measures while the financial regulatory authorities (such as CBIRC and CSRC) supervise the financial institutions controlled by financial holding companies. When the risk occurs, according to the principle of “who is supervised and who is responsible,” the corresponding regulatory body will take the lead in risk disposal.
The Measures consist of seven chapters, which cover general provisions, establishment and licensing, corporate governance and synergies, consolidated management and risk management, supervision and management, legal liability, and supplementary provisions. The Measures stipulate that a financial holding company should strengthen the management of related party transactions, its intra-group transactions with the financial institutions it controls, the financial institutions it holds, and the financial institutions and other institutions within the group, as well as with other related parties. The Measures also factor in a transition period for certain "enterprise groups" that have been already formed. At the end of the transition period, these enterprises should meet the regulatory requirements of the Measures and be checked and accepted by the respective "financial management department."
Comment Due Date: August 24, 2019
Keywords: Asia Pacific, China, Banking, Insurance, Securities, Financial Holding Companies, Systemic Risk, Financial Stability, Governance, PBC
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.
Previous ArticleBCBS Meets to Discuss Policy and Supervisory Initiatives
The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.
The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).
The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.
The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.
The Hong Kong Monetary Authority (HKMA) is consulting on the draft Financial Institutions (Resolution) Ordinance (Cap. 628), or FIRO, Code of Practice chapter on liquidity and funding in resolution, until March 14, 2022.
The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.
The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).