CBIRC Finalizes Net Capital Rules for Wealth Management Subsidiaries
CBIRC published the rules on net capital of wealth management subsidiaries of commercial banks (Provisional). The rules will come into force on March 01, 2020. According to the rules, the net capital of wealth management subsidiaries shall meet the two standards. First, the net capital shall not be less than RMB 500 million and shall not be less than 40% of the net assets. Second, the net capital shall not be lower than the risk capital, with the aim to ensure that the wealth management subsidiaries maintain the net capital at a sufficient level. Additionally, CBIRC published questions and answers (Q&As) on these net capital rules for wealth management subsidiaries of banks.
From September 20 to October 27, 2019, CBIRC had solicited public opinions on the rules and carefully studied the feedback to include the reasonable suggestions. The rules consist of 20 articles in four chapters. The chapters cover general provisions, net capital regulatory standards, supervision and management, and supplementary provisions. The rules constitute a supporting regulatory policy of the Rules on Wealth Management Business of Commercial Banks. They draw on the net capital regulatory requirements of asset management institutions and make appropriate adjustments based on the Guidance on Regulating Asset Management Business of Financial Institutions and the Rules on Wealth Management Business of Commercial Banks, while taking into consideration the characteristics of wealth management subsidiaries of commercial banks.
The board of directors of the wealth management subsidiaries shall bear the ultimate responsibility for net capital management while the senior management shall be responsible for the net capital management. Wealth management subsidiaries shall regularly submit to the regulators net capital statements and be responsible for the authenticity, accuracy, and completeness of relevant statements, timely reporting of major changes in supervisory indicators, and disclosure of net capital status in the annual report. For wealth management subsidiaries that do not meet the net capital requirements, the banking regulators may take relevant measures in accordance with laws and regulations. CBIRC will continue to formulate supporting rules and policies and continuously improve the regulatory framework for wealth management business.
Related Links
Effective Date: March 01, 2020
Keywords: Asia Pacific, China, Banking, Securities, Wealth Management Subsidiary, Governance, Regulatory Capital, CBIRC
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Trevor Howes
IFRS 17 technical advisor; AXIS actuarial modeling system expert; extensive experience in life insurance and life reinsurance, with focus on modeling, valuation, and financial reporting
Related Articles
APRA Decides to Standardize Submission Date for Quarterly Reporting
APRA announced the standardization of quarterly reporting due dates for authorized deposit-taking institutions.
Bundesbank Publishes Supporting Documentation for Reporting by Banks
Bundesbank published a list of "EntryPoints" that are accepted in its reporting system; the list provides taxonomy version and name of the module against each EntryPoint.
ECB Working Group Publishes Recommendations on EURIBOR Fallbacks
The private sector working group of ECB on euro risk-free rates published the recommendations to address events that would trigger fallbacks in the Euro Interbank Offered Rate (EURIBOR)-related contracts, along with the €STR-based EURIBOR fallback rates (rates that could be used if a fallback is triggered).
EBA Publishes Phase 1 of Reporting Framework 3.1
EBA published the phase 1 of its reporting framework 3.1, with the technical package covering the new reporting requirements for investment firms (under the implementing technical standards on investment firms reporting).
APRA to Finalize Capital Adequacy Standard Revisions by January 2022
Asia Pacific Australia Banking APS 111 Capital Adequacy Regulatory Capital Basel RBNZ APRA
ESMA Issues Guidelines on Outsourcing to Cloud Service Providers
ESMA published the final guidelines on outsourcing to cloud service providers.
EBA Publishes Data on Deposit Guarantee Schemes
EBA published annual data for two key concepts and indicators in the Deposit Guarantee Schemes (DGS) Directive—available financial means and covered deposits.
OSFI Sets Out Plan for Future Guidance on Managing Technology Risk
OSFI has set out the schedule for release of draft guidance on the management of technology risks by federally regulated financial institutions and private pension plans.
MAS Updates Housing Loan Rules, Proposes Corporate Governance Guidance
MAS updated rules for new housing loans by banks and finance companies.
HKMA Publishes Guideline on Sustainable Finance Grant Scheme
HKMA published a statement on the 100% Personal Loan Guarantee Scheme and a guideline on the Green and Sustainable Finance Grant Scheme (GSF Grant Scheme) as announced in the 2021-22 Budget.
