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China Banking Regulatory System And Sustainable Business Development Of Foreign Banks In China

China Banking Regulatory System And Sustainable Business Development Of Foreign Banks In China. WANG YAN XIU Deputy Director-General Banking Supervision Department III China Banking Regulatory Commission May, 2005. Outline of CBRC. Why CBRC

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China Banking Regulatory System And Sustainable Business Development Of Foreign Banks In China

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  1. China Banking Regulatory System And Sustainable Business Development Of Foreign Banks In China WANG YAN XIU Deputy Director-General Banking Supervision Department III China Banking Regulatory Commission May, 2005

  2. Outline of CBRC Why CBRC • Separate banking supervision function from the PBC, to enable the PBC focus on monetary policy & its implementation; • Enhance independence, specialization, effectiveness and authority of banking supervision • Establish a comprehensive mechanism among CBRC, CSRC and CIRC to form a teamwork to prevent financial risks.

  3. Outline of CBRC Objectives • Protect the interests of depositors and consumers through prudential and effective supervision; • Maintain market confidence in China’s financial system through prudential and effective supervision; • Promote public awareness and understanding of modern finance through customer education and information disclosure; and • Reduce financial crime and maintain financial stability.

  4. the major responsibilities of CBRC • formulate supervisory rules and guideline for banking institutions • authorize and terminate business of banking institutions • conduct fit and proper tests for banking directors • conduct off-site surveillance and on-site examinations of banking institutions • perform other duties assigned by the State Council.

  5. Legislation of CBRC • Law of PRC on banking regulation and supervision • Administrative rule governing the financial licence • Administrative rule governing the Auto financing Company • Provisional rule on the pricing of Services by Commercial Banks

  6. China’s banking sector At the end of 2004, China’s banking sector comprised • four wholly State-owned commercial banks • three policy banks, • eleven joint-stock commercial banks • four asset management companies • 112 city commercial banks • 723 urban credit cooperatives • 34,577 rural credit cooperatives • 30 thousand postal saving institutions.

  7. Foreign Bank Operation in Chinaby the end of 2004 • Foreign banks branches and sub-branches 186 • Wholly foreign owned bank and sub-branches 16 • Joint venture banks 5 • Foreign finance company 4 • Total operational entities 211 • Representative office 220

  8. Licensing Standards: Representative Offices • Sound home supervision • Licensed financial institutions by home financial authorities • Good performance • sound management • compliance

  9. Licensing Standards: Branches • Sound home supervision • Approval by home supervisor • Total assets no less than US$ 20 billion • Capital Adequacy Ratio no less than 8% • Representative offices established in China for more than 2 years

  10. Business: Foreign Banks • Deposits • Loans and advances • Bills acceptance and discounting • Trading in government bonds, financial bonds, and other non-equity securities in foreign exchange • Letter of credit and guarantee • Domestic and international settlement • Trading in foreign exchange as principle and broker • Exchange in foreign currency • Inter-bank borrowing and lending • Bank cards • Safekeeping service • Credit investigation and consultancy • Other businesses approved by CBRC

  11. Eligibility of Senior Management Essential requirements for Subsidiary: Chairman, Vice Chairman, CEO, Branch: General Manager, Deputy General Manager • Compliance • Competence: expertise and management experience • Good track record

  12. Further Opening-up Under the WTO • Open 18 cities for foreign banks to conduct renminbi business • Allow eligible foreign banks to provide RMB services for Chinese enterprises • Increase the single foreign equity holding in Chinese financial institutions to 20 per cent from 15 per cent, and set the maximum foreign equity holding at 24.99 per cent • Lower the operating capital requirement on foreign banks • Provide time limits for review and approval

  13. further Opening-up Under the WTO • Issue regulation on credit card business to facilitate foreign involvement • Open the Chinese auto financing market and approve the preparation of three foreign auto financing companies • Allow the foreign banks to provide over 100 types of business in12 lines, including, QFII custodian, on-line banking, T-bond underwriting, cash management and pooling, financial derivatives, wealth management

  14. Measures to improve supervision of foreign banks Establish risk rating for foreign bank supervision • Foreign banks branches subject to SOSA ranking (Strength-of-Support Assessment) & ROCA rating (Risk management, Operational control, Compliance, Asset quality) • Foreign bank subsidiaries and Sino-foreign joint-venture banks subject to CAMELs • Supervise Foreign banks by consolidated base

  15. Thank you !Always welcome your comments and suggestions

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