Newspaper Observation: China's Banking Industry Presses "Accelerator"
Author: reporter Sue Moon Source: China Financial and Economic News Published: 2019-11-18
Recently, the CBRC has drafted the "Implementation Measures for Administrative Licensing of Foreign Banks (Draft for Soliciting Opinions)" (hereinafter referred to as the "Draft for Soliciting Opinions"). The market generally believes that the "draft for consultation" plays a role in building on the past, and aims to promote the implementation of measures to open the banking industry to the outside world, so that foreign banks have more opportunities and broader opportunities to participate in the high-quality development of China's society and economy. The release of the "Draft for Soliciting Opinions" shows that China's banking industry has a stronger signal and greater strength.
China's banking industry is opening up faster
Recently, the State Council has decided to amend some provisions of the Regulations of the People's Republic of China on the Administration of Foreign Banks (hereinafter referred to as the "Administrative Regulations"), mainly including four aspects:
The first is to relax the conditions for shareholders of foreign banks and foreign banks. Cancel the conditions of the sole or controlling shareholder of the wholly foreign-owned bank, the sole or major shareholder of the foreign party of the proposed Chinese-foreign joint venture bank, and the total assets of the foreign bank of the proposed branch at the end of the year before the application for establishment, and cancel the proposed joint venture bank The sole or major shareholder of the Chinese party shall be a condition of a financial institution.
The second is to relax restrictions on foreign banks setting up corporate banks and branches of foreign banks in China to better meet the actual needs of foreign banks in expanding their business in China.
The third is to further relax restrictions on foreign banking operations. Increase the business of “agent issuance, agency redemption, underwriting government bonds” and “agent collection and payment” to ensure that the business scope of Chinese and foreign corporate banks is consistent; lower the threshold for foreign bank branches to absorb RMB deposits, and allow foreign bank branches to absorb China The lower limit of the amount of domestic citizens' time deposits has been changed from not less than 1 million yuan each to not less than 500,000 yuan; while meeting the requirements of prudence, the approval of foreign banks to start RMB business has been cancelled.
Fourth, adjust the regulatory requirements for the working capital of foreign bank branches. Relax the requirements for foreign bank branches to hold a certain percentage of interest-earning assets, and for foreign banks' branches in China that continue to meet the relevant capital adequacy ratios, exempt their RMB shares in the sum of working capital plus reserves and their RMB risk assets. Proportion restrictions to enhance the autonomy and flexibility of foreign bank branch asset utilization.
"This revision further relaxes the access conditions for foreign banks, enriches the commercial presence of foreign banks, and provides a more relaxed and autonomous institutional environment for the establishment and operation of foreign banks, which will attract more institutions to operate in China. "Said Liu Fushou, the chief lawyer of the China Banking Regulatory Commission.
"In order to promote the implementation of relevant policies and measures in the" Administrative Regulations, "the" Draft for Soliciting Opinions "further clarified the operational details. The relevant person in charge of the CBRC pointed out that the" Draft for Soliciting Opinions "requires the continuous promotion of decentralization, decentralization, and optimization. In the business environment, it is proposed to further decentralize or adjust the levels of approval for the qualifications of some foreign banks and branch opening approvals; cancel the approval of the approval of the qualifications of the management branch presidents; shorten the time limit for the approval of two-level approvals; reduce the material requirements for some of the permits ,and many more.
The purpose of revising the "Administrative Regulations" and drafting the "Draft for Soliciting Opinions" is to implement the decision-making arrangements of the Party Central Committee and the State Council and implement major financial opening measures. The Nineteenth National Congress of the Communist Party of China clearly proposed to promote the formation of a new pattern of comprehensive opening up. At the opening ceremony of the Boao Forum for Asia Annual Conference 2018, General Secretary Xi Jinping proposed a number of opening requirements, including relaxing restrictions on foreign shares in the banking and insurance industries, relaxing restrictions on the establishment of foreign financial institutions, and expanding the business scope of foreign financial institutions in China. Relevant persons in charge of the Ministry of Finance and the Central Bank have repeatedly “broadcasted” the timetable and roadmap for China's banking industry to open to the outside world.
Since joining the WTO in 2001, China's banking industry has made significant progress in opening up to the outside world. In terms of institution establishment, in 2003, the former CBRC issued the "Administrative Measures for Overseas Financial Institutions to Invest in Chinese Financial Institutions." In the following years, a small upsurge in the introduction of overseas strategic investors by Chinese banks was set off. Bank of Communications, Industrial Bank, Hua Xia Bank, Bank of Beijing, Bank of Nanjing and other major joint-stock commercial banks and city commercial banks, Industrial and Commercial Bank, Construction Bank, Bank of China and other large state-owned banks are among them. By the end of 2007, a total of 25 Chinese banks had introduced 33 foreign institutional investors.
In 2007, HSBC, Standard Chartered, Citi, and East Asia were allowed to convert their existing branches into corporate banks registered in China, and the number of foreign-funded corporate banking institutions in China increased rapidly. Different from the branch's operating form, a corporate bank registered in China can operate as a local legal person and carry out RMB retail business.
The financial crisis in 2008 has slowed down the pace of foreign banks' expansion into the Chinese market. In 2017, China promoted a new round of higher level opening up to the outside world, and the banking industry opened again to the outside world by pressing the "accelerator key".
In the past three years, the CBRC has issued a series of policies and measures around the opening up of the banking industry, covering various aspects such as institution establishment, investment and stock ownership, business scope, and approval matters. Including: In March 2017, the former CBRC issued a notice in principle allowing foreign legal person banks to invest in domestic banking financial institutions. Earlier, foreign banks' investment in banking financial institutions in China was conducted through overseas parent banks. After that, foreign banks can choose to invest in Chinese legal person banks or Sino-foreign joint venture banks as the main investment.
At the end of 2017, the former CBRC made the first amendment to the implementation measures for administrative licensing matters for foreign banks implemented in 2015, which is in line with the above-mentioned investment and shareholding regulations, and increased the permit conditions and procedures for the establishment of foreign-funded legal person banks and investment in domestic banking financial institutions. And the application materials, etc., and to the maximum extent consistent with Chinese-funded commercial banks in terms of permit conditions and procedures; at the same time, minimize administrative licensing matters and simplify administrative licensing procedures.
In 2018, in order to continue to implement the announced major financial liberalization measures, the CBRC lifted the restrictions on Chinese banks and financial asset management companies with a single foreign shareholding of no more than 20% and a total shareholding of no more than 25%. The proportion of equity investment rules and national treatment promote the facilitation of foreign investment.
In the past two years, following the spirit of continuous relaxation of access, the CBRC has accepted and approved Fubon Huayi Bank Co., Ltd. to establish Chongqing Branch, Hong Kong Chiyou Bank Co., Ltd. to establish Shenzhen Branch, and Jordan Bank to establish Shanghai Branch. As of the end of the second quarter of 2019, foreign banks have established 41 foreign legal entities, 116 foreign bank branches and 151 representative offices in China.
In combination with the recent revision of the Management Regulations and the drafting of the "Draft for Soliciting Opinions", a series of policies and measures with gold content have fully demonstrated China's ability to effectively fulfill its commitment to openness to the outside world.
"There is a point of view that the assets of foreign banks account for a relatively low proportion of the assets of banking financial institutions. It is not correct to believe that the door of China's banking industry is not sufficiently open. This is incorrect. Most foreign banks have experienced a century of precipitation and formed a stable Risk culture, not very pursuing scale expansion, and after being hit hard by the financial crisis, the headquarters of foreign bank groups generally deal with the adverse effects of the crisis through business adjustments. Choosing a strategic contraction has significantly reduced the growth rate of their assets. "Bank of China Research Yuan Xiaohui, a researcher at the Institute, said that from the perspective of a series of policies and measures, China's banking industry has been open to the outside world, and it is not inferior to the international community.
Expanding opening up and maintaining financial security
A series of policies and measures provided new space for the development of foreign banks, and also brought new opportunities and challenges to the domestic banking industry.
"Foreign banks have injected fresh blood into China's financial industry. Effectively exerting the" catfish effect "can promote the competitiveness of the banking industry." Liu Fushou said that most of the foreign banks entering the Chinese market have strong financial strength, good reputation and possess Advanced management experience, professional knowledge and outstanding talents will help Chinese banks in China to review their own shortcomings, learn from advanced international concepts and experiences, expand product and service innovation, increase effective financial supply, and better serve the real economy and the general public. Financial consumers.
Earlier this year, SPD Bank and Standard Chartered Bank signed the "Belt and Road" Strategic Cooperation Memorandum. The two parties intend to cooperate intensively in multiple business areas to help Chinese companies develop diversified investments in countries along the "Belt and Road". "Foreign banks have advantages in high-end wealth management, cash management, derivatives trading and other businesses. The overseas branch network is more widely deployed, and they are more competitive in providing 'package' financial service solutions and serving 'going out' customers." Yuan Xiaohui It is said that Chinese-funded banks and foreign-funded banks work together to serve the "Belt and Road", and the construction of the free trade zone has good prospects.
At present, we must not take lightly to prevent and resolve major risks. We must adhere to the bottom-line thinking and strengthen the awareness of anxiety. At the same time that the establishment of foreign-funded banks, investment and investment, approval items, business scope, etc. are "opened and loosened", China's financial supervision department should always build fire prevention lines and tighten safety valves.
For example, the Administrative Regulations relax restrictions on foreign banks' simultaneous establishment of corporate banks and branches of foreign banks in China, while strengthening the standardization and independence of operations of sub-branches and branches through the regulation of part-time executives and transaction conditions; The "Draft for Comments" emphasizes the need to further strengthen the supervision and management of foreign banks, including the requirements of equity management and anti-money laundering and anti-terrorist financing reviews in the relevant licensing chapters in accordance with the principle of agreement between China and foreign countries.
"Equal emphasis on expanding opening up and maintaining financial security is one of the principles grasped during the revision of the Management Regulations." Liu Fushou emphasized that the introduction of major opening-up measures must be based on risk management and control, and the CBRC has focused on strengthening risk management and control measures, focusing on Prevent financial risks and safeguard national financial security.
Yuan Xiaohui said that judging from the experience and lessons of South Korea and other countries, the banking system that is highly dependent on foreign investment is relatively fragile, which is likely to cause problems such as vicious competition among peers. It is also prudent for the United States, Japan and other countries to implement opening up of the banking industry.
China's supervision of foreign banks in China has been piloted and then gradually liberalized, which is a gradual and steady progress. "It is worth paying attention to strengthening the supervision of cross-border capital operations of foreign banks and strengthening the risk isolation of foreign parent banks and subsidiary banks. As banks, securities, and insurance industries have successively opened to the outside world, the supervision of foreign-funded financial holding companies in China should also be explored. Institutional construction. "Yuan Xiaohui said.