CBIRC published a notice on its decision to exempt foreign-funded corporate banks from the regulatory requirements for large-scale risk exposure of parent bank groups. CBIRC made this decision to integrate the current regulatory rules with international standards. The notice also mentions that CBIRC shall strengthen the monitoring of relevant data, make reasonable judgments based on the type of exposure and actual risk of transactions between foreign corporate banks and parent banking groups, and, if necessary, take supervisory measures as required. CBIRC issued the notice to further clarify the relevant regulatory requirements for large risk exposures of foreign banks to the parent bank group within the purview of the implementation of the measures for administration of large risk exposure of commercial banks, which were published by CBIRC in 2018.
CBIRC provides the following clarifications:
- The risk exposure of foreign-funded legal person banks to single inter-bank customers or group customers within the parent bank group is not subject to the regulatory requirements for large risk exposures stipulated in the measures for administration of large exposures.
- All banking and insurance regulatory bureaus shall supervise and urge foreign-funded corporate banks to effectively implement the main responsibilities of risk prevention and control and continue to do a good job in the corresponding risk management of the parent bank group's large risk exposure and the filling of related statements.
- The banking and insurance regulatory bureaus shall strengthen relevant data monitoring, make reasonable judgments based on the types of exposures and actual risk situations of transactions between foreign-funded legal person banks and parent bank groups, and promptly alert banks about abnormal changes or weak risk management capabilities. When necessary, supervisory measures such as conducting prudential discussions and issuing supervisory opinions can be adopted.
- All banking and insurance regulatory bureaus shall strengthen the supervision of related-party transactions, in accordance with relevant regulations, and strictly control the risks of unfair transactions and benefit transmission that may exist in transactions between foreign-funded legal person banks and parent bank groups.
- All banking and insurance regulatory bureaus shall continue to pay attention to the operation and management of the parent bank group of foreign-funded legal person banks, comprehensively consider the changes in the parent bank group's risk, and conduct a dynamic assessment of the risk isolation between the subsidiary bank in China and the parent bank group to prevent cross-border risk contagion.
Related Links (in Chinese)
Keywords: Asia Pacific, China, Banking, Large Exposures, Foreign Banks, Basel, CBIRC
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.