The Asia Global Payment Summit. Bali, Indonesia. 10-11 October 2019

CBIRC to Set 500M Yuan Minimum on Net Capital of Bank Wealth Management Subsidiaries

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The China Banking and Insurance Regulatory Commission (CBIRC) plans to set a new minimum on the net capital of bank wealth management subsidiaries.

CBIRC has just released the draft version of the “Commercial Bank Wealth Management Subsidiary Net Capital Administrative Measures (Trial)” (商业银行理财子公司净资本管理办法(试行)(征求意见稿)) for the solicitation of opinions from the public.

The Measures call for the net capital management of wealth management subsidiaries to satisfy two standards:

  1. Net capital cannot be less than 500 million yuan, or less than 40% of net assets;
  2. Net capital cannot be less than risk capital, to ensure that wealth management subsidiaries maintain sufficient net capital levels.

Other regulatory requirements outlined by the Measures include:

  1. The board of wealth management subsidiaries undertaking final responsibility for the net capital management of companies, and senior management bearing responsibility for net capital management work;
  2. Wealth management subsidiaries shall regularly submit net capital supervision reports, as well as bear responsibility for their veracity, accuracy and completeness;
  3. When the net capital, net capital and net assets ratio, net capital and risk capital ratio and other indicators change by more than 20% compared to the preceding report or fail to satisfy regulatory requirements, a written report and explanation of reasons shall be submitted to banking regulators;
  4. Wealth management subsidiaries shall disclose net capital management information in their annual reports.

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