CBIRC Consults on Rules for Commercial Banking Subsidiaries in China
CBIRC issued a consultation on the "Administrative Measures for Commercial Banking Financial Subsidiaries." The measures were drafted keeping in mind the "Guiding Opinions on Regulating Financial Asset Management Business of Financial Institutions" and the "Measures for the Supervision and Administration of Financial Banking Business of Commercial Banks." The proposed measures stipulate the regulatory requirements for financial management subsidiaries to conduct wealth management business. Here, a financial subsidiary is referred to as a non-bank financial institution engaged in wealth management business for commercial banks. The deadline for comments is November 18, 2018.
These measures cover establishment of a financial management subsidiary by a commercial bank to conduct the asset management business and are intended to strengthen the risk management of the wealth management business of banks. According to the CBIRC spokesperson, the timing for commercial banks to set up wealth management business through the establishment of financial management subsidiaries is mature, as there are now clear requirements in the “new regulations for asset management." Commercial banks can combine their strategic planning and their own conditions to establish a financial management business through the establishment of a financial management subsidiary, in accordance with the principle of "commercial voluntariness." Alternatively, they can choose not to establish a new financial management subsidiary, but integrate the wealth management business into the already developed asset management business.
However, a commercial bank will no longer conduct the wealth management business (except for the continued disposal of the stock wealth management products). The financial subsidiaries should operate independently and assume their own profits and losses, effectively preventing business risks from being transmitted to the parent bank. The measures consist of the following sections:
- The general rules section mainly contains definitions, basic principles, and regulatory arrangements of financial subsidiaries and wealth management business.
- The section on establishment of changes and terminations mainly stipulates the organizational form, naming rules, and approval procedures.
- The business rules section stipulates the business scope, sales management, investment operation, management of cooperative institutions, investment management of self-owned funds, product registration, and other related matters of financial subsidiaries.
- The risk management section stipulates requirements related to corporate governance, business management system, risk isolation, related-party transactions, risk reserve, net capital, internal control audit, and investor protection mechanism.
- The supervisory management section contains requirements for the implementation of off-site supervision, on-site inspection, information reporting, regulatory measures, and administrative penalties for financial subsidiaries, with the final section focusing on supplementary regulations.
Related Links (in Chinese)
Comment Due Date: November 18, 2018
Keywords: Asia Pacific, China, Banking, Asset Management, Wealth Management Products, Bank Subsidiaries, CBIRC
Previous Article
APRA to Integrate AASB 17 into Capital and Reporting FrameworksRelated Articles
BCBS Amends Capital Treatment of Non-Performing Loan Securitizations
BCBS published a technical amendment to the capital treatment of securitizations of non-performing loans by banks.
BoE to Move Statistical Data Collection to BEEDs Portal
BoE announced that the Data and Statistics Division is planning to move collection of statistical data to the BoE Electronic Data Submission (BEEDS) portal.
APRA Updates Reporting Standards and Guidance for EFS Data Collection
APRA published the updated reporting standards and guidance for the collection of Economic and Financial Statistics (EFS), following a consultation process. Also published was a response letter to the feedback received on the proposal for amending the EFS reporting standards and guidance.
EC Consults on Criteria for Environmentally Sustainable Activities
EC is consulting on a draft delegated regulation to supplement the Taxonomy Regulation (2020/852) by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as environmentally sustainable.
IFRS Examines Incorporation of Climate Risk Issues into IFRS Standards
The IFRS Foundation published material highlighting the ways in which existing requirements in IFRS standards require companies to consider climate-related matters when their effect is material to the financial statements.
EBA Analyzes Impact of Unwind Mechanism of Liquidity Coverage Ratio
EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
ECB Outlines Views on Possible Changes to AnaCredit Rule and TLTROs
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB Begins First Phase of Post-Implementation Review of IFRS 9
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB Report Examines Progress in Resolvability of Systemic Institutions
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA Benchmarks National Insolvency Frameworks Across EU
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
