CBIRC Issues Rules on Implementation of Recovery and Resolution Plans
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
Previous Article
JFSA Publishes Notice on IFRS 9 and Paper on Use of Derivatives DataRelated Articles
ESAs Issue Multiple Regulatory Updates for Financial Sector Entities
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
FSB and NGFS Publish Initial Findings from Climate Scenario Analyses
The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.
FSB Issues Reports on NBFI and Liquidity in Government Bonds
The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.
ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
EBA Finalizes Methodology for Stress Tests, Issues Other Updates
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
EU Finalizes Rules Under Crowdfunding Service Providers Regulation
The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.
OSFI Sets Out Work Priorities and Reporting Updates for Banks
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
APRA Finalizes Changes to Capital Framework, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.
BIS Hub and Central Banks Conduct CBDC and DeFI Pilots
The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.
