China Banking Regulatory Commission: Corporate governance of the banking and insurance industry is improving steadily
Our reporter Liu Qi
On December 31, 2021, the China Banking and Insurance Regulatory Commission announced that in 2019, the China Banking and Insurance Regulatory Commission issued and implemented the "Measures for the Evaluation of Corporate Governance of Banking and Insurance Legal Person Institutions (for Trial Implementation)", initially establishing a comprehensive corporate governance supervision covering all commercial banks and insurance institutions. The evaluation system will be implemented for two consecutive years in 2020 and 2021.
The results of the regulatory evaluation in 2021 show that the overall corporate governance of the banking and insurance industry has shown steady changes for the better, but problems in some areas still require attention.
Specifically, the existing problems include the weakening and weakening of the party's leadership.
Some state-owned banking and insurance institutions did not play the leading role of the party, the relevant institutional arrangements were relatively general, the operability was not strong, and the pre-research system of the party committee on major operation and management matters was not implemented in place.
At the same time, shareholder behavior is not compliant and imprudent.
False capital contribution, false capital contribution by shareholders, circular capital injection, withdrawal of capital contribution, and non-self-owned capital contribution by shareholders with entrusted capital and issuance and management of financial products, etc., still exist in bancassurance institutions to varying degrees.
Investment and shareholding are not compliant. Some shareholders have entrusted or held equity on behalf of others in violation of the regulations. Some shareholders have invested in multiple commercial banks, violating the regulatory requirements of "Two Participants and One Control".
In some institutions, shareholders have pledged shares in violation of regulations, and the percentage of pledged shares of individual institutions is too high or changes too frequently.
Shareholders interfere in business operations in violation of regulations. Some institutional major shareholders actually control bancassurance institutions by controlling the nomination and remuneration of directors and senior managers, manipulate the board of directors and senior management, interfere with company operations in violation of regulations, and even wantonly infringe on company interests.
There are defects in the management of connected transactions.
Identification management is not in place, related party identification is not comprehensive, related party transactions are not compliant with regulations, some directors, senior managers, and shareholders fail to report related party status in accordance with regulations, and some institutions' related party credit and capital use related party transactions exceed the regulatory requirements.
The review and supervision are not in place, the board of directors has not established a related-party transaction control committee, or the related-party transaction control committee cannot effectively perform the duties of review and risk control, and the internal audit and supervision of related transactions is lacking.
There is illegal transfer of interests. A small number of institutions transfer interests through illegal related transactions, issue unsecured loans to related parties in violation of regulations, provide explicit or implicit guarantees for related parties’ financing activities, and invest in related parties’ projects and assets in violation of regulations.
In addition, the effectiveness of the board of directors is insufficient.
For example, the structure of the board of directors does not meet the regulatory requirements, the proportion of directors nominated by the same shareholder and its related parties exceeds the regulatory requirements, the number of independent directors in the board of directors is insufficient, and the heads of special committees such as auditing, related party transactions, and nomination remuneration are held by non-independent directors.
The China Banking and Insurance Regulatory Commission stated that in the next step, the China Banking and Insurance Regulatory Commission will urge bancassurance institutions to seriously rectify the problems found in the evaluation, and truly promote reform and construction through evaluation, continue to consolidate the effectiveness of evaluation work, and promote my country's banking insurance companies Governance and construction have reached a new level.
(Securities Daily)