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August 23, 2018

CBIRC issued a Decision to abolish and amend certain regulations, with the aim to implement the policy spirit of the 19th National Congress of the Communist Party of China on promoting the formation of a new pattern of comprehensive opening up and on promoting the announced expansion of the banking industry as soon as possible. As part of the Decision, the restrictions on the proportion of foreign-invested shares of Chinese banks and financial asset management companies will be abolished. Additionally, the rules for the proportion of equity investment in domestic and foreign capital will be implemented to continuously promote the convenience of foreign investment. The Decision will be implemented as of the date of promulgation, which is August 17, 2018.

The Decision mainly has the following four aspects:

  • The first is to abolish the "Measures for the Administration of Overseas Financial Institutions to Invest in Chinese-funded Financial Institutions." In accordance with the principle of national treatment, there is no separate regulation for foreign-invested Chinese-funded financial institutions, and Chinese and foreign-funded enterprises apply uniform market access and administrative licensing methods.
  • The second is to cancel the "Implementation Measures for the Administrative Licensing Issues of Chinese Commercial Banks of China Banking Regulatory Commission," the "Implementation Measures for the Administrative Licensing Issues of Rural Small and Medium-sized Financial Institutions of the China Banking Regulatory Commission," and the "Implementation Measures for the Administrative Licensing Issues of Non-bank Financial Institutions of the China Banking Regulatory Commission" for foreign investment in Chinese banks. Delete the relevant provisions of the above three licensing methods regarding the investment of a single overseas financial institution and its related parties as sponsors or strategic investors to individual Chinese commercial banks and rural commercial banks and as strategic investors to individual financial asset management companies. The ratio for this shall not exceed 20% while the ratio of the investment of a number of overseas financial institutions and their related parties to the above institutions shall not exceed 25%.
  • The third is to clarify the regulatory attributes and legal application of Chinese banks that are foreign-owned. In accordance with the principle of equal treatment of Chinese and foreign capital, if foreign financial institutions invest in Chinese-funded commercial banks and rural small and medium-sized financial institutions, the organization and supervision of the institution at the time of shareholding will be supervised and managed, and the type of institutions of the bank will not be adjusted due to foreign investment.
  • The fourth is to clarify that overseas financial institutions invest in Chinese banks. In addition to complying with relevant financial prudential regulations, they should also abide by foreign-funded basic laws on foreign investors investing in China.

 

Related Links (in Chinese)

Effective Date: August 17, 2018

Keywords: Asia Pacific, China, Banking, Decision, Administrative Licensing, Foreign Owned Banks, CBIRC

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