CBIRC Consults on Net Capital Rules for Wealth Management Subsidiaries

By Regulatory News

September 20, 2019

Regulatory Capital

CBIRC published draft rules on the net capital of wealth management subsidiaries of commercial banks. According to the draft rules, the net capital management of financial subsidiaries should meet two criteria. The first criterion specifies that net capital should not be less than CNY 500 million and should not be less than 40% of the net assets. The second criterion states that net capital should not be lower than the venture capital to ensure that financial subsidiaries maintain adequate net capital levels. The deadline for comments is October 27, 2019.

The draft rules consists of four chapters and 20 articles. The chapters cover general rules, net capital supervision standards, supervision and management, and supplementary rules. The board of directors of the financial subsidiaries shall bear the ultimate responsibility for the company's net capital management and the senior management shall be responsible for organizing the implementation of net capital management. The wealth management subsidiary shall regularly submit the net capital supervision report and be responsible for the authenticity, accuracy, and completeness of the relevant statements. Also, the subsidiary shall timely report major changes in relevant regulatory indicators and disclose net capital management in the annual report. For financial subsidiaries that do not meet the requirements of net capital management, CBIRC may adopt relevant regulatory measures in accordance with laws and regulations.

Related Links (in Chinese)

Comment Due Date: October 27, 2019

Keywords: Asia Pacific, China, Banking, Securities, Wealth Management Subsidiary, Governance, Regulatory Capital, CBIRC

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