China’s Banking Regulator Issues New Commercial Bank Equity Trusteeship Measures

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The China Banking and Insurance Regulatory Commission (CBIRC) has just issued new measures concerning equity trusteeship operations by Chinese commercial banks.

CBIRC said that the “Commercial Bank Equity Trusteeship Measures” (商业银行股权托管办法) are for the purpose of strengthening equity management by commercial banks and increasing their equity information transparency, as well as achieving standardised regulation.

The “Commercial Bank Equity Management Provisional Measures” (商业银行股权管理暂行办法) issued by CBIRC at the start of 2018 made clear reference to the establishment of equity trusteeship systems by commercial banks.

A CBIRC official said that while equity trusteeship had helped to improve management levels and reduce costs, the sector currently suffered from irregularities including “trusteeship in form.”

“In order to fully employ the role of equity trusteeship, standardise bank equity trusteeship conduct and raise bank equity information transparency and equity management levels, CBIRC has drafted these [new] measures,” said the CBIRC official.

Commercial banks must select trusteeship entities that satisfy requirements in accordance with the Measures, as well as execute service agreements with them that fully include the regulatory requirements stipulated by the Measures.

Trusteeship entities are mainly required to satisfy the following requirements:

  1. Be capable of diligently managing shareholder registers for commercial banks;
  2. Be capable of providing convenient, safe and highly effective services to commercial banks;
  3. Be fair, transparent and open in trusteeship fee collection;
  4. Conduct effective supervision of the equity activities of commercial banks, and submit commercial bank equity information to regulatory authorities.

CBIRC has also issued the “Notice Concerning Properly Performing Relevant Implementation Work in Relation to Commercial Bank Equity Trusteeship Measures” (关于做好商业银行股权托管办法实施相关工作的通知), which sets a transitional period of until the end of June 2020 for completion of trusteeship arrangements by commercial banks that have not engaged in trusteeship.

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