Featured Product

    CBIRC Issues Rules on Implementation of Recovery and Resolution Plans

    June 09, 2021

    CBIRC published interim measures for implementation of recovery and resolution plans of bancassurance institutions, along with the questions and answers (Q&A) on these measures. The bancassurance institutions, as mentioned in these measures, refer to the financial institutions established within the territory of the People’s Republic of China, such as commercial banks, rural credit cooperatives, and other financial institutions that accept public deposits, in addition to financial asset management companies, financial leasing companies, and insurance companies. These measures, draw on the international financial regulatory standards while considering the peculiarities of the local environment, came into force on the date of promulgation.

    The measures cover basic principles behind establishment of a recovery and resolution plan mechanism, supervision and administration of such plans, and supplementary requirements or provisions related to recovery and resolution planning. The measures also detail the scope of application, internal governance structure of financial institutions, implementation of the information management system, and working mechanism between supervisory departments. The measures set out objectives for development of recovery and resolution plans, content to be included in the recovery and resolution plans, and implementation process of recovery and resolution plans. The “recovery plan” referred to in these measures refers to a response plan formulated in advance by a bancassurance institution and approved by CBIRC and its dispatched offices while the "resolution plan" referred to in these measures refers to the response plan proposed in advance by the bancassurance institution and approved by CBIRC and its dispatched agencies. The measures emphasize that the recovery and resolution plans should insist on using the institution’s own assets, shareholder assistance, and other market-oriented channels to raise funds to carry out self-rescue, to help strengthen the main responsibility and shareholder responsibilities of bancassurance institutions in risk prevention and resolution and to effectively prevent moral hazards. 

    In terms of the scope of application, “big to fail” and “small but easy to fail” are both “pain points” that should be considered and dealt with in recovery and resolution plans. The measures stipulate that institutions meeting certain thresholds should formulate recovery and resolution plans. After adjustments, depository financial institutions, financial asset management companies, and financial leasing companies whose on-balance sheet and off-balance sheet assets reach RMB 300 billion or more as well as the insurance (holding) groups and insurance companies whose total on-balance sheet assets reach RMB 200 billion or more shall formulate recovery and resolution plans. The above thresholds should be based on all consolidated data of the group and the scope of consolidation is determined in accordance with the scope of consolidation under the supervision of CBIRC. Recovery and resolution plans should separately consider the stress scenarios of a single bancassurance institution or its holding group and the entire financial system as well as consider the potential impact of cross-market, cross-industry, and cross-border risk transmission in crisis situations. If necessary, bancassurance institutions should adjust the assumptions of stress test scenarios or add additional stress scenarios. For global and domestic systemically important financial institutions, if other regulatory provisions exist regarding the recovery and resolution plans, those provisions shall prevail. Moreover, if the previously issued relevant measures are inconsistent with this measure, they shall be implemented in accordance with the provisions of this measure.

     

    Related Links (in Chinese)

    Effective Date: Promulgation Date

    Keywords: Asia Pacific, China, Banking, Insurance, Resolution Framework, Resolution Planning, Recovery Planning, Q&A, CBIRC

    Related Articles
    News

    APRA Finalizes Guidance on Management of Climate Change Risks

    The Australian Prudential Regulation Authority (APRA) released the final Prudential Practice Guide on management of climate change financial risks (CPG 229) for banks, insurers, and superannuation trustees.

    November 26, 2021 WebPage Regulatory News
    News

    European Council Adopts Position on Digital Finance Package Proposals

    The European Council adopted its position on two proposals that are part of the digital finance package adopted by the European Commission in September 2020, with one of the proposals involving the regulation on markets in crypto-assets (MiCA) and the other involving the Digital Operational Resilience Act (DORA).

    November 25, 2021 WebPage Regulatory News
    News

    PRA Proposes Rulebook Changes; BoE Extends BEEDS Testing Window

    The Prudential Regulation Authority (PRA) is proposing, via the consultation paper CP21/21, to apply group provisions in the Operational Resilience Part of the PRA Rulebook (relevant for the Capital Requirements Regulation or CRR firms) to holding companies.

    November 25, 2021 WebPage Regulatory News
    News

    EC Proposes New Measures Under Capital Markets Union Package

    The European Commission (EC) has adopted a package of measures related to the Capital Markets Union.

    November 25, 2021 WebPage Regulatory News
    News

    EBA Publishes Standards to Calculate Risk-Weights of CIUs Under CRR

    The European Banking Authority (EBA) published the final report on draft regulatory technical standards for the calculation of risk-weighted exposure amounts of collective investment undertakings or CIUs, in line with the Capital Requirements Regulation (CRR).

    November 24, 2021 WebPage Regulatory News
    News

    FED Outlines Lending Conditions and Supervisory Activities in H1 2021

    The Board of Governors of the Federal Reserve System (FED) published a report that summarizes banking conditions in the United States, along with the supervisory and regulatory activities of FED.

    November 24, 2021 WebPage Regulatory News
    News

    APRA Expects Boards to Strengthen Ability to Oversee Cyber Resilience

    The Australian Prudential Regulation Authority (APRA) recently completed two pilot initiatives in its 2020-2024 Cyber Security Strategy, which was published in November 2020.

    November 23, 2021 WebPage Regulatory News
    News

    FSB Updates List of Global Systemically Important Banks

    The Basel Committee on Banking Supervision (BCBS) published further information related to its 2021 assessment of global systemically important banks (G-SIBs), with additional details to help understand the scoring methodology.

    November 23, 2021 WebPage Regulatory News
    News

    FASB Proposes Improvements to Credit Losses Standard

    The Financial Accounting Standards Board (FASB) is consulting on an Accounting Standards Update and the associated taxonomy improvements for requirements on troubled debt restructurings and vintage disclosures under the credit losses standard (for financial instruments) topic 326.

    November 23, 2021 WebPage Regulatory News
    News

    US Agencies Issue Statement on Crypto-Asset Policy Initiatives

    US Agencies issued a statement that summarizes the work undertaken during the interagency policy sprints focused on crypto-assets and provides a roadmap of future work related to crypto-assets.

    November 23, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7733