1/5 of Chinese Banks and Insurers Score D or Worse for Corporate Governance

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A new report from China Banking and Insurance Regulatory Commission (CBIRC) paints a dismal picture of corporate governance in the country’s financial sector.

The “2020 Banking and Insurance Institution Corporate Governance Regulatory Assessment Results Report” (2020年银行保险机构公司治理监管评估结果总体情况) examined the corporate governance levels of 1792 financial institutions in China, including 1605 commercial banks and 187 insurers.

CBIRC sought to provide a comprehensive score of the corporate governance levels of these institutions by assessing their compliance and effectiveness across a total of eight key areas, including leadership, shareholder governance, board governance, supervisory and senior executive governance, internal risk controls, affiliate transaction governance, market restraints and governance of other interested parties.

Out of the 1792 banking and insurance sector financial institutions assessed by CBIRC only one scored an “A” for corporate governance, while only 374 managed to grab “B” grades.

1026 institutions scored a “C”, accounting for 57.25% of the total, while 209 institutions (11.66%) scored a “D,” and another 182 institutions (10.16%) were ranked “E.”

CBIRC said that it would continue to perform post-assessment work to drive financial institutions to “earnestly rectify problems uncovered,” as well as continue to strengthen and improve the regulation of corporate governance.

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