China Financial Regulation Alert - Banking
Issue 10 ——June - July 2011
The China Financial Regulation Alert series for Banking, Insurance and Securities & Futures contain major laws and regulations recently issued in the PRC which govern the banking, insurance, securities & futures, mutual fund, private equity, guarantee and trust sectors. This publication is a summary of public information, the accuracy of which has not been verified by KPMG.
Guidelines for Regulating the Issuance of Non-Financial Corporate Debt Financing Instruments in the Interbank Bond Market Issued by National Association of Financial Market Institutional Investors – NAFMII Circular (2011) No.8
The purpose of the guidelines is to regulate the issuance of non-financial corporate debt financing instruments in the interbank bond market, to protect the legitimate rights of both investors and issuers, to maintain open, fair and transparent market orders, and to promote the healthy development of the interbank bond market. The guidelines define the concrete meaning of issuance by tender, the interested parties and object of issuance, and the specific operations of issuance. The guidelines specify the responsibilities of the book runner, the appointment of issuers and book runners, the place and time of book building, and the price inquiry and other relevant issues about book building. The guidelines also give brief instructions on the principles and patterns of private placement, and meanwhile rule that interested parties have obligations to cooperate with the inspection of the NAFMII.
Circular from the Anti-Money Laundering Bureau of PBOC on the Solicitation of Public Opinions on the Administrative Measures for Anti-Money Laundering and Anti-Terrorist Financing of Payment Institutions
The measures specify the responsibilities of payment institutions in respect of client identification, maintenance of client identity information and transaction records, reporting of suspicious transactions, as well as investigations, supervision and management of anti-money laundering and anti-terrorist financing activities. Furthermore, they specify in detail the obligations and supervision of anti-money laundering and anti-terrorist financing activities for those granted third-party payment licences. The measures point out that the central bank will set up the China Anti-money Laundering Monitoring and Analysing Center to take charge of receiving and analysing suspicious transaction reports of payment institutes. The head offices of payment institutes should set up robust internal control systems on anti-money laundering and anti-terrorist financing, with special departments or posts responsible for related work and reporting to the branches of PBOC where the head offices locate for their record.
Circular from CBRC on Supporting Commercial Banks to Further Improve their Financial Services for Small Enterprises – Yin Jian Fa (2011) No.59
该通知的主要目的是鼓励商业银行进一步改进小企业金融服务，以巩固小企业金融工作成果。该通知指出，银监会将提高小企业金融服务市场准入事项的审批效率，引导商业银行需重点扶持符合要求的小企业，加大对小企业业务条线的管理建设及资源配置力度，积极进行小企业融资服务的创新，加强小企业专营管理建设，新设或改造部分支行为小企业金融服务专业支行。同时将采取支持商业银行发行专用于小企业贷款的金融债，对小企业金融服务良好的银行采取差异化考核，提高小企业不良贷款比率容忍度，积极推动多元化小企业融资服务体系建设等措施。The circular primarily aims to encourage commercial banks to further improve their financial services for small enterprises so as to consolidate achievements in this regard. As pointed out in the circular, the CBRC will expediate approval for entry into this market. It will also guide commercial banks in supporting small enterprises that meet government requirements, to strengthen the management and resource allocation of their small enterprise business lines, to actively innovate with small enterprise financing services, to improve the management of specialised branches targeting small enterprises, as well as to set up new sub-branches specially for providing financial services to small enterprises or convert the functions of some existing ones into such. Meanwhile, the CBRC will support commercial banks to issue financial bonds catered to small enterprise loans, adopt differentiated assessments for banks with good small enterprise financial services, relax the requirements on non-performance loan ratios of such businesses, and actively promote the launch of diversified financing services for small enterprises.
Circular from SAFE on Upgrading the Management of the Foreign Exchange Sale and Purchase Business of Banks – Hui Fa (2011) No.23
This circular primarily improves the management of the banks’ foreign exchange sale and purchase business in the following aspects: definition of the foreign exchange sale and purchase business of banks; subsequent division of duties of SAFE and its bureaux; centralised management of profits in foreign currencies; advancing for domestic trading expenses of overseas related banks; exchange settlement of foreign banks for RMB needed for daily operations of their foreign exchange business in China; provisions for various taxes in foreign currencies; exchange settlement and adjustment of profits in foreign currencies; remittance of dividends to foreign shareholders; reporting of accounting for profits in foreign currencies for record; translation of capital between local and foreign currencies; opening, use, clearing or closing of accounts of subsidiaries in China established by foreign banks; foreign exchange sale and purchase business for debtors in the course of operations; purchase and sale of foreign exchange of banks for trading; and corresponding penalties.
Circular from CBRC on Soliciting Public Comments on the Extension and Classification Standards for XBRL of Banking Regulatory Statements (Exposure Draft)
该公告发布了《银行监管报表可扩展商业报告语言（XBRL）扩展分类标准（征求意见稿）》、《银行监管报表XBRL扩展分类标准说明》、《银行监管报表XBRL扩展分类标准元素清单》，以及《银行非现场监管报表模板》，目的在于向社会各界公开征求意见和建议。《银行监管报表 XBRL 扩展分类标准》内容包括非现场监管基础报表62 张（包括法人机构基础报表44 张和分支机构基础报表18 张）和特色报表9 张，由元素和6 类链接库组成，其中元素1810 个，链接库包括列报链接库、计算链接库、定义链接库、标签链接库（包括中文和英文标签）、参考链接库和公式链接库。
The circular issues the Extension and Classification Standards for XBRL of Banking Regulatory Statements (Exposure Draft), the Descriptions of Extension and Classification Standards for XBRL of Banking Regulatory Statements, the Element List of Extension and Classification Standards for XBRL of Banking Regulatory Statements, and the Templates of Off-site Banking Regulatory Statements to solicit comments and suggestions from the public. The Extension and Classification Standards for XBRL of Banking Regulatory Statements includes 62 pages of basic off-site statements (including 44 pages of basic statements for legal person institutions and 18 pages for branches) and 9 pages of special statements, consisting of elements and six types of link libraries. There are 1,810 elements and the link libraries include the presentation link library, calculation link library, definition link library, tag link library (including Chinese and English label), reference link library and formula link library.
· 银监会发布《商业银行杠杆率管理办法》 --银监会令(2011)3号
Circular from CBRC on the Administrative Measures for Leverage Ratio of Commercial Banks – CBRC Order (2011) No.3
These measures target commercial banks in China with an aim to effectively control their leverage level to ensure their safe and sound operations. These measures specify the method of calculating leverage ratios, including formulas for calculating leverage ratios and balances of on- and off-balance sheet assets; as well as the supervision and management of leverage ratios. These measures require that target leverage ratios of commercial banks are not set below the minimum regulatory requirements, and that the leverage ratios of consolidated and unconsolidated statements should not be less than 4%. The measures require the banks to regularly report to the CBRC their leverage levels, tier one capital and deduction items for tier one capital, as well as specify corresponding penalties for banks with leverage ratios below the minimum regulatory requirements. These measures will come into effect from 1 January 2012.
Circular from CBRC on Soliciting Public Opinions on the Guidelines for Corporate Governance of Commercial Banks (Exposure Draft)
This circular issues the Guidelines for Corporate Governance of Commercial Banks (Exposure Draft) and solicits comments and suggestions from the public. The guidelines primarily aim to improve the corporate governance of financial institutions in China’s banking sector, to prompt them to establish methodical decision-making, implementation, monitoring, incentive and restraint mechanisms for improving the effectiveness of their corporate governance. The guidelines specify the corporate governance structure, including shareholders and general meetings of shareholders, board of directors, board of supervisors and senior management of banking institutions; their development strategies, values and social responsibilities; their risk management and internal controls; their incentive and restraint mechanisms; information disclosure requirements; supervision and management mechanism and so on.
Circular from CBRC on Approving the Adjustment on the Formation of Rural Banks – Yin Jian Fa (2011) No.81
This circular is for financial institutions such as various bureaux of the CBRC, policy banks, state-owned commercial banks, joint-stock commercial banks, postal savings banks and provincial rural credit cooperatives. It mainly contains the following: adjusting approval for the formation of rural banks; improving the affiliation policy for rural banks; and setting up of rural banks of scale with a number of branches on the principles of intensive development and reasonable geographical concentration by the initiating bank. Qualified banking institutions intending to establish rural banks should apply to the CBRC, and present documents such as development strategies, self-assessment reports on the inter-regional development, and annual plans for establishing rural banks. From the issuance date of this circular, rural banks approved to be established can continue to apply to operate in accordance with the relevant regulations.
PBOC issued the Administrative Provisions on System Test and Verification of Non-Financial Institutions’ Payment Service Business – PBOC Circular (2011) No.14
These provisions aim to ensure the orderly system testing and verification of non-financial institution payment service. They cover the formulation purpose, application scope, testing frequency, identification of testing organisations, key organisations responsible for testing and verification, and confidentiality requirements. The provisions also include the following: preparation of test procedures, content of operating system testing, timeline of testing report submission and concrete content of test reports; as well as the contracts signed before implementation, verification principles, working periods of verification organisations; and supervisory and management regulations.
Circular from MOF on Issues Related to Supervision and Management of Valuation of Financial Institutions’ State-owned Assets – Cai Jin (2011) No.59
This circular primarily aims at strengthening and regulating the supervision and management of valuation of financial institutions’ state-owned assets. It specifies the following: the specific range of valuation for different types of enterprises; assessment of clients; approval of application approval documents for economic activities; assessment of the filling management authority; approval of submission deadlines for applications; evaluation of the filling requirements of approval forms and application of findings; and the selection requirements of assessment agencies and so on.
· 国务院办公厅转发银监会发展改革委等部门关于促进融资性担保行业规范发展意见的通知--国办发 (2011)30号
Circular from CBRC, NDRC and other authorities on Promoting Standardised Development of Financing Guarantee Industry, forwarded by the General Office of State Council – Guo Ban Fa (2011) No.30
The circular is intended to solve existing problems in the guarantee industry, including the small scale of institutions, inaccurate capital information and the weak ability to withstand risks resulting from prolonged lack of effective regulation, and to regulate the operation of the industry. The circular sets the overall objectives of the development of financing guarantee industry, encourages the guarantee companies to develop new businesses and products and to improve the service and efficiency under effective risk controls; and requires the guarantee industry to strengthen self-regulations. It requires local governments to support and work with the financing guarantee industry, and meanwhile increase their supervision of local financing guarantee institutions to ensure regulated development of the industry.
Sources: China’s State Council, MOF, PBOC, CBRC, SAT, China Banking Association, China Trustee Association, National Association of Financial Market Institutional Investors and other regulators’ websites.
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