PBC, CBIRC, and CSRC Issue Guidance to Improve Supervision of SIFIs
PBC, CBIRC, and CSRC jointly issued the "Guiding Opinions on Improving the Supervision of Systemically Important Financial Institutions (SIFIs)." The guidance clarifies the definition and scope of SIFIs, stipulates the annual evaluation process for identification of SIFIs, and sets out additional regulatory requirements for SIFIs. PBC, CBIRC, and CSRC also published questions and answers (Q&A) on the guidance.
Financial institutions that are deemed to be systemically important shall conduct relevant business activities in compliance with the regulations in the guiding opinions and relevant implementation rules. The guidance improves the supervision of SIFIs by:
- Setting special regulatory requirements for SIFIs to enhance their ability to continue operations and reduce the possibility of major risks. Relevant departments have adopted the corresponding prudential supervision measures to ensure that SIFIs take risks and avoid blind expansion.
- Establishing a special "disposal" mechanism for SIFIs, promoting the formulation of recovery and "disposal" plans, conducting disposition assessments, and ensuring that SIFIs can be safely, quickly, and effectively "disposed of" when they have significant risks.
The guidance also stipulates that SIFIs need to develop a recovery plan, update it annually, and submit it to the crisis management team for review and implementation. The recovery plan is designed to ensure that financial institutions are able to resume normal operations by taking relevant measures under extreme stress scenarios. Recovery plans include, but are not limited to, agency overviews, governance structures for implementing recovery plans, key functions and core business identification, design and analysis of stress scenarios, recovery measures trigger conditions, implementation options, feasibility analysis, implementation barriers, and improvement recommendations. Moreover, the crisis management team will work with SIFIs to develop a disposal plan and update it on an annual basis. Additionally, PBC, along with CBIRC and CSRC, will regularly conduct stress tests on SIFIs and, based on the results of stress tests, impose additional regulatory requirements or take appropriate regulatory measures on SIFIs.
Keywords: Asia Pacific, China, Banking, Insurance, Securities, SIFI, Systemic Risk, Guidance, Recovery and Resolution, Stress Testing, CBIRC, CSRC, PBC
Featured Experts
Metin Epözdemir
Metin Epözdemir helps European and African banks with design and implementation of credit risk, stress testing, capital management, and credit loss accounting solutions.
Amnon Levy
Financial researcher; authority in credit portfolio management and AI/ML, risk-based pricing, climate and credit, CECL/IFRS 9; credit and ALM
Emil Lopez
Credit risk modeling advisor; IFRS 9 researcher; data quality and risk reporting manager
Previous Article
EC Vice President Speaks on Banking and Capital Markets UnionsRelated Articles
EC Adopts Financial Reporting Changes Arising from Benchmark Reforms
EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.
BIS Bulletin Examines Key Elements of Policy Response to Cyber Risk
BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.
HMT Updates List of Post-Brexit Equivalence Decisions in UK
HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.
EBA Issues Erratum for Technical Package on Reporting Framework 3.0
EBA published an erratum for technical package on phase 1 of the reporting framework 3.0.
APRA Publishes FAQ on Measurement of Credit Risk Weighted Assets
APRA updated a frequently asked question (FAQ), for authorized deposit-taking institutions, on the measurement of credit risk weighted assets.
EBA Publishes Risk Dashboard for Third Quarter of 2020
EBA published the quarterly risk dashboard, along with the results of the Risk Assessment Questionnaire survey among 60 banks and 15 market analysts.
ECB Analysis Shows Privacy as Biggest Concern in Use of Digital Euro
ECB concluded the public consultation on the introduction of a digital euro in EU.
ECB Finalizes Guide on Supervisory Approach to Bank Consolidation
ECB published a guide that sets out the supervisory approach to consolidation in the banking sector.
SRB Chair Outlines Work Priorities for 2021
The SRB Chair Elke König published an article setting out work priorities for 2021.
FDIC Selects Companies to Compete in Final Phase of Tech Sprint
FDIC has selected 11 technology companies—including BearingPoint, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the third and final phase of the rapid prototyping competition.
