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
EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation
The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).
EBA Publishes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.
EIOPA Examines Physical Climate Risk Exposure, SII Non-Compliance
The European Insurance and Occupational Pensions Authority (EIOPA) published a report assessing insurers' exposure to physical climate change risks
EC Publishes Results on Review of Web Accessibility Directive
The European Commission (EC) published the results of a public consultation, held in October 2021, on the review of the Web Accessibility Directive.
NGFS Report Explores Quantification of Climate Risk Differentials
The Network for Greening the Financial System (NGFS) published two reports to aid central banks and regulators in their oversight of the financial sector and in their central bank operations
MAS Consults on Adjustment Spreads for Conversion of SOR Contracts
The Monetary Authority of Singapore (MAS) and the SC-STS are jointly consulting, until June 10, 2022, on setting adjustment spreads for the conversion of legacy SOR contracts to SORA reference rate.
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
