CBIRC published a State Council Order on the decision to amend the regulations of PBC on foreign-funded banks and insurance companies. The decision takes effect as of the date of promulgation. The revision of some articles of the two regulations is mainly to implement the opening-up policies approved by the central government on the market entry and business scope of foreign banks and insurance companies in China. CBIRC also published questions and answers (Q&As) related to the decision to amend the regulations.
The main revisions to the regulations on foreign-funded banks include the following:
- Removing the total asset requirement, as of the previous year-end prior to application, for the sole or controlling shareholder to establish a wholly foreign-owned bank, for the sole or major foreign shareholder to establish a Sino-foreign joint venture bank, and for a foreign bank to set up a branch in China, in addition to removing the condition that the sole or major Chinese shareholder of a Sino-foreign joint venture bank shall be a financial institution.
- Allowing foreign banks to concurrently set up wholly foreign-owned subsidiaries and branches, or concurrently set up Sino-foreign joint venture banks and foreign bank branches in China.
- Relaxing restrictions on foreign banks' business scope and allowing them to engage in issuance, redemption, and underwriting of government bonds. The threshold for foreign-bank branches to take time deposits from citizens in China has been lowered from RMB 1 million to RMB 500,000 per transaction and the approval requirement for foreign-funded banks to engage in RMB business is also removed.
- Improving regulatory measures for foreign bank branches, relaxing the requirement for foreign bank branches to hold a certain proportion of interest-bearing assets, and relaxing the restrictions on the proportion of RMB capital to RMB risk assets for foreign bank branches in China whose capital adequacy ratio continues to meet relevant regulations.
The main revisions to the regulations on foreign-funded insurance companies include the following:
- Removing the requirement that a foreign-insurance company applying for establishing a foreign-funded insurance company in China shall have been engaged in insurance business for more than 30 years and have established a representative office in China for more than 2 years
- Foreign insurance group companies are allowed to invest and set up foreign-funded insurance companies in China
- Overseas financial institutions are allowed to take shares in foreign-funded insurance companies in China
Effective Date: October 15, 2019
Keywords: Asia Pacific, China, Banking, Insurance, Foreign-funded Banks, Foreign-funded Insurance Companies, Capital Adequacy, Opening-up Policy, State Council, PBC, CBIRC
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