PBOC Approves Licenses for Financial Holding Companies

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The Chinese central bank has give its approval to the licensing of two new financial holding companies.

On 17 March the People’s Bank of China (PBOC) announced that it had approved the provision of financial holding company establishment licenses to China CITIC Financial Holding Co., Ltd. (中国中信金融控股有限公司) and Beijing Financial Holding Group Co., Ltd. (北京金融控股集团有限公司).

“The release of the first batch of financial holding company licenses is a major move for supplementing short-comings in financial regulation,” said state-owned media of the approvals.

“It is of benefit to driving an effective separation between finance and real operations for non-financial enterprises, and further expediting positive circulation between economy and finance.”

In September 2020 the PBOC issued the “Financial Holding Company Measures” (金控办法), stipulating that non-financial enterprises that are the real controllers of multiple financial institutions must lawfully establish financial holding companies for inclusion under regulatory scrutiny.

The move arrives in tandem with a crackdown on the fintech activities of online giants such as Ant Group, whose listing on the Hong Kong and Shanghai bourses was shelved in November 2020.

“Obtaining financial holding licenses means facing stricter regulation, and should further improve corporate governance mechanisms and strengthen comprehensive risk controls,” said Zheng Chenyang (郑忱阳), a researcher from the Bank of China.

“The creation of international-class financial holding platforms will also raise the ability to service the real economy.”