CBIRC Pushes for Retiring Execs from Established Banks to Work at Regional Lenders to Address Risk Issues

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China’s banking regulator hopes to improve the quality and professionalism of the country’s smaller regional financial institutions by tapping senior executives from established lenders who are approaching retirement age.

The China Banking and Insurance Regulatory Commission (CBIRC) and the Chinese Banking Association (CBA) said that they would accelerate work for the development of a national “Financial Talent Pool” (金融人才库) in an official statement released on 2 December.

The Financial Talent Pool will be comprised of senior executives, independent directors and external supervisors from established banks and insurers, who will be sent to small and medium-sized financial institutions to help drive their development.

CBIRC said that the move was for the purpose of “resolving common problems in terms of the corporate governance of small and medium-sized banking and insurance companies and a scarcity of professional staff,” as well as “the prevention and resolution of financial risk, and driving the high-quality development of the banking and insurance sectors.”

According to CBIRC many smaller-scale regional lenders have recently succumbed to risk issues due to problems in relation to the quality of their senior personnel.

“The main reason that high-risk financial institutions have suffered from risk-issues is because their key senior executives have been non-professionals, and there has been a long-term issue with poor conduct,” said CBIRC.

“The establishment of the Financial Talent Pool is mainly to strengthen standardised and unified management, and to encourage and support specialist personnel from large-scale banks and insurance organisations who are approaching retirement to serve as senior executives, independent directors or external supervisors at small and medium-sized banks and insurers.

“This will better employ their rich experience and professional value, and supplement the shortcomings in the development of the financial staff teams of small and medium-sized banks and insurers.”

According to CBIRC reforms of municipal commercial banks in provinces such as Liaoning and Shanxi have already seen the deployment of senior executives from larger Chinese lenders.

CBIRC said that the online systems for the Financial Talent Pool are already in the preliminary phase of completion, and are expected to commence trial operation before the end of 2021.

The next step will be for CBIRC and CBA to “better employ the advantages of talent from national banking and insurance institutions and optimise the allocation of financial talent resources,” as well as “raise the share of high-tier professional staff at small and medium-sized banks and insurers to provide a safeguard for their high-quality growth.”