China Amends Regulatory By-laws Governing Foreign Invested Banks

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China’s banking authority has unveiled an amended version of by-laws for foreign banks operating in China.

On 25 December the China Banking and Insurance Regulatory Commission (CBIRC) released the amended “People’s Republic of China Foreign Invested Bank Administrative Regulation Implementation By-laws” (中华人民共和国外资银行管理条例实施细则),” as a supplement to the “People’s Republic of China Foreign Invested Bank Administrative Regulations.”

A senior official from CBIRC said that the amendments contained by the by-laws mainly cover five areas:

  1. Stipulate conditions for the simultaneous establishment of subsidiary banks and branch banks by foreign banks in China;
  2. Removal of content for renminbi operation examination and approvals and requirements for the total assets of foreign banks establishing institutions in China;
  3. Given that the Administrative Regulations reduce the threshold for individual renminbi-denominated fixed deposits provided by the branches of foreign banks to Chinese citizens from 1 million yuan to 500,000 yuan, and such branches usually do not take out deposit insurance in China, the by-laws stipulate that these branches must disclosed deposit insurance information to clients;
  4. Amendment of the specific requirements in relation to interest-bearing assets of foreign banks. For example, the branches of foreign banks should hold CBIRC-designated interest-bearing assets equal to no less than 5% of their public liabilities, and no more than 30% of working capital;
  5. Integrated assessment of all branches of a foreign bank in China. Assessment methods for interest-bearing assets, renminbi working capital adequacy ratios and liquidity ratios have been expanded from assessment of individual institutions to integrated assessment of all branches in China.

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