Systemically important banking supervision continues to improve——
From "big to fail" to "big to fail"
In order to prevent "too big to fail", policies related to systemically important banks have been introduced one after another.
Following the release of the "Measures for the Evaluation of Systemically Important Banks" in December 2020, its additional regulatory rules have been officially released recently.
At the same time, the list of the first batch of systemically important banks in my country and the subsequent "Administrative Measures for the Total Loss Absorbing Capacity of Global Systemically Important Banks" (hereinafter referred to as the "Measures") were released, known as the Chinese version of TLAC (Total Loss Absorbing Capacity). ).
The so-called total loss absorbing capacity refers to the total amount of capital and debt instruments that can absorb losses through write-down or conversion into common stock when the global systemically important bank enters the disposal stage.
"Systemically important financial institutions have large scale, high complexity, and strong connections with other financial institutions. The provision of key financial services in the financial system has an important impact on the smooth and efficient operation of the entire financial system." Governor Yi of the People's Bank of China Gang said at the 2021 Financial Street Forum annual meeting that identifying systemically important institutions and improving related regulatory systems will help focus on key points and better promote the overall stability of the financial system.
Supervision gradually integrates with international standards
To guard against the "bull nose" of systemic financial risks, first of all lies in systemically important banks.
Banks with larger assets and wider influence will "kick the whole body" once a problem occurs, and its risks may quickly spread to other financial institutions.
Therefore, strengthening the supervision of systemically important banks is an inherent requirement for strengthening macro-prudential management and an important measure to prevent the risk of systemically important banks being “big to fail”.
After the 2008 international financial crisis, in order to better promote financial stability and prevent financial risks, the Financial Stability Board (FSB) began to publish a list of global systemically important banks in 2011. There are 30 banks in total, and the global system was released in 2013. A list of important insurance institutions, a total of 9 companies, and put forward higher regulatory requirements.
At present, the four banks of China's Industry, Agriculture, my country Construction, and China Construction and China Ping An Insurance Group have been selected into the above-mentioned list.
At the same time, major economies have also strengthened the supervision of domestic systemically important financial institutions.
my country attaches great importance to the supervision of systemically important financial institutions.
In November 2018, the People’s Bank of China, the China Banking Regulatory Commission and the China Securities Regulatory Commission jointly issued the "Guiding Opinions on Improving the Supervision of Systemically Important Financial Institutions", which clarified the assessment, identification and additional supervision of systemically important financial institutions in my country’s banking, insurance, and securities industries And the overall policy framework for recovery and disposal.
In December 2020, the People's Bank of China and the China Banking and Insurance Regulatory Commission jointly issued the "Measures for the Evaluation of Systemically Important Banks", which clarified the basic rules for the identification of systemically important banks in my country.
In order to do a good job in the additional supervision of systemically important banks, additional regulations must be issued as soon as possible to provide guidance and basis for the implementation of additional supervision of systemically important banks.
“Recently, the People’s Bank of China and the China Banking and Insurance Regulatory Commission have assessed and identified 19 domestic systemically important banks, and officially issued the "Additional Supervision Regulations for Systemically Important Banks (Trial)" (hereinafter referred to as the "Additional Supervision Regulations"), marking my country's systemic importance The additional supervision of banks has officially landed, further improving my country's macro-prudential management policy system." said Zeng Gang, deputy director of the National Finance and Development Laboratory.
"Promoting the continuous improvement of systemically important banking supervision is conducive to reducing complexity and systemic risks, establishing and improving internal capital restraint mechanisms, enhancing banks' ability to resist risks, absorbing losses, and self-rescue, preventing'big to fail' risks, and promoting my country The financial system has sustained and healthy development of higher quality." Wang Jiali, assistant general manager of the financial business department of Oriental Jincheng, believes that among the member countries of the Basel Committee for Banking Supervision, most countries have established their own list of systemically important financial institutions and supervision Measures and the recent successive promulgation of policies indicate that the management of my country's systemically important financial institutions is gradually in line with international standards.
Being shortlisted means greater responsibility
With the implementation of the "Additional Supervision Regulations", the list of the first batch of systemically important banks in my country has also been announced.
According to the Measures for the Evaluation of Systemically Important Banks, the People's Bank of China and the China Banking and Insurance Regulatory Commission have assessed and identified 19 domestic systemically important banks based on 2020 data, including 6 state-owned commercial banks, 9 joint-stock commercial banks and 4 city commercial banks.
According to the system importance score, it is divided into five groups from low to high: the first group of 8 companies, including Ping An Bank, China Everbright Bank, Hua Xia Bank, China Guangfa Bank, Bank of Ningbo, Bank of Shanghai, Bank of Jiangsu, Bank of Beijing; the second group 4 Companies, including Shanghai Pudong Development Bank, China CITIC Bank, China Minsheng Bank, and China Postal Savings Bank; the third group of 3 companies, including Bank of Communications, China Merchants Bank, and Industrial Bank; the fourth group of 4 companies, including the Industrial and Commercial Bank of China, Bank of China, and China Construction Bank, Agricultural Bank of China; No banks have entered the fifth group.
The assets of these 19 banks together account for 60% of the total assets of the banking industry.
It can be said that the list of systemically important banks is, in a sense, a confirmation of the market influence and importance of financial institutions.
Of course, for these large institutions, it also means that they need to take on more responsibilities in maintaining financial stability and face more comprehensive and strict supervision.
"Becoming a systemically important bank will accept stricter supervision and put forward higher requirements on the bank's risk prevention capabilities and sustainable operation capabilities, especially on the bank's capital management, and individual banks will have capital supplementary pressure. At the same time, Some banks with relatively tight capital may moderately slow down asset growth to meet regulatory requirements and affect profitability.” Wen Bin, chief researcher of China Minsheng Bank, said that in terms of opportunities, becoming a systemically important bank has a great impact on the bank’s reputation and market image. The big upgrade will help improve credit ratings and enhance competitiveness in storage, storage, and business innovation.
At the same time, under strict regulatory requirements, the information of systemically important banks will be more transparent and the quality of their assets will be improved, which will allow greater room for business expansion and value growth.
Zeng Gang believes that, on the whole, facing stricter regulatory constraints (especially additional capital requirements), institutions that are shortlisted for systemically important banks need to re-examine the costs and benefits of business expansion and establish a more complete set of institutions in their long-term development. The capital restraint mechanism to improve the endogenous accumulation of capital, and effectively give play to the guiding and restraining role of capital on business development.
In terms of business philosophy, it is necessary to shift from priority to scale to priority to quality. Through the adjustment of customer structure and business structure, gradually realize light weight and light capital development, improve the risk prevention and control system, and strengthen the entire chain of pre-warning, tracking during the event, and disposal after the event. , While achieving its own high-quality development, reduce potential systemic risks.
Supporting policies will be improved quickly
The evaluation and supervision of systemically important banks mainly includes steps such as issuing evaluation methods, issuing additional supervisory regulations, determining the list of systemically important banks, and differentiated supervisory plans.
With the introduction of the Chinese version of TLAC, it means that the "four steps" of my country's supervision of banking institutions with systemically important financial institutions have basically been achieved.
Specifically, what is the impact of the implementation of the "Measures" on my country's global systemically important banks?
The person in charge of the relevant department stated that the total loss absorbing capacity requirements stipulated in the Measures are in line with market expectations. After taking into account supporting policies, my country’s global systemically important banks have little pressure to meet the standards and will not affect their credit supply capacity within the scope of their operations. .
On the whole, the implementation of the "Measures" has a positive impact on my country's global systemically important banks, which will guide them to improve their risk disposal mechanisms, improve their sound operation level, and pay more attention to matching business development with risk resistance capabilities, which will help control their irrational expansion and system. The accumulation of sexual risks promotes its transformation in the direction of diversification and integration.
At the same time, the "Measures" benchmarked against the latest practice of international financial regulatory reforms, and it is also of positive significance for Chinese banks to participate in global competition.
"It is worth mentioning that, compared with the draft for comments, the Ministry of Finance has become the joint issuing authority of the Measures, which reflects that the Ministry of Finance is more active in fulfilling the responsibilities of investors in state-owned financial institutions and demonstrates the management of state-owned financial capital. Continuous improvement and optimization." Wen Bin believes that in the next step, the four major banks of China Construction Industry and Agriculture, as global systemically important banks, in the process of implementing TLAC requirements, if they rely solely on the endogenous profit to supplement capital, they may limit asset investment and growth. Therefore, more attention must be paid to innovative design and issuance of total loss absorbing capacity tools to effectively meet regulatory requirements and maintain economic and financial stability.
What other policies will be introduced next?
Wang Jiali expects that supporting policies such as supplementary channels for systemically important banks to supplement additional capital regulatory requirements, setting up reasonable arrangements for transitional periods, and specific regulatory requirements and standards such as corporate governance and information disclosure will be introduced one after another.
In addition, systemically important financial institutions cover the banking, securities, insurance, and other systemically important financial businesses. In the future, policies and regulatory measures for other non-banking systemically important institutions need to be gradually improved.