China News Service, September 13 According to the website of the Central Bank, on September 13, the "Trial Measures for the Supervision and Management of Financial Holding Companies" (People's Bank of China Order [2020] No. 4, hereinafter referred to as "Financial Control Measures") was officially released.
A few days ago, the relevant person in charge of the People's Bank of China accepted an interview with reporters on issues related to the "Financial Control Measures."
Data map: citizens pass by the People's Bank of China.
Photo by China News Agency reporter Zhang Xinglong
Why should the "Financial Control Measures" be formulated?
In recent years, some large financial institutions in my country have carried out cross-industry investments and formed financial groups; and some non-financial companies have invested and controlled many financial institutions of various types and become de facto financial holding companies.
Among them, some institutions with strong strength and standardized operations have optimized the allocation of resources, reduced costs, enriched and improved financial services through this model, which is conducive to meeting the needs of various enterprises and consumers, and improving the financial services of the real economy. ability.
But in practice, there are also a small number of companies blindly expanding into the financial industry, lack of isolation mechanisms, and increasing risks.
The Party Central Committee and the State Council attach great importance to the supervision of financial holding companies, and clearly require the regulation of comprehensive financial operations and the integration of industry and finance, strengthen the overall supervision of financial holding companies, and accelerate the completion of shortcomings in the regulatory system.
On September 13, 2020, the State Council issued the "Decision on Implementing the Access Management of Financial Holding Companies" (Guo Fa [2020] No. 12, hereinafter referred to as the "Access Decision"), authorizing the People’s Bank of China to conduct market access for financial holding companies. Into management and organize and implement supervision.
The People's Bank of China, in conjunction with relevant departments, listened extensively to opinions from all parties and formulated the "Financial Control Measures."
The formulation and implementation of the "Financial Control Measures" is an important measure to implement the decisions and arrangements of the Party Central Committee and the State Council. The People's Bank of China will carry out access management and continuous supervision of financial holding companies in accordance with laws and regulations, prevent and resolve systemic risks, and enhance the ability of financial services to serve the real economy .
Why implement market access management for financial holding companies?
According to the "Access Decision" and "Financial Control Measures", the People's Bank of China implements market access management for financial holding companies.
Main considerations: First, financial holding companies are often large in scale, diversified in business, and highly related. They operate across institutions, markets, industries, and regions, which are related to national financial security and social public interests, and need to implement market access. specification.
The second is to establish a clear administrative license, which is an important part of the legal supervision of financial holding companies, which is conducive to comprehensively promoting the operation of financial holding companies in compliance with laws and regulations, and preventing cross-contagion of risks.
The third is to reflect the supervision concept that the financial industry is a franchise industry and legal access, and it is also in line with the prevailing practices of major countries and regions.
What is the scope of application of the "Financial Control Measures"?
The "Financial Control Measures" will include financial holding companies that meet the following conditions: First, the controlling shareholders and actual controllers are domestic non-financial enterprises, natural persons, and recognized legal persons; Second, they substantially control two or more types of financial institutions; It is that the total assets or entrusted management assets of financial institutions under substantial control reach a certain scale, or the establishment of a financial holding company is required in accordance with the requirements of macro-prudential supervision.
For financial groups formed by cross-industry investment holding by financial institutions, the regulatory policy standards shall be determined with reference to the "Financial Control Measures", and specific rules shall be formulated separately.
What is the general idea and regulatory framework of financial holding company supervision?
The "Financial Control Measures" follows the concept of macro-prudential management, and implements supervision on financial holding companies formed by investment by non-financial enterprises.
Financial holding companies shall be managed in accordance with financial institutions, on the basis of consolidation, to conduct comprehensive, continuous and penetrating supervision of capital, behavior and risks, regulate business behavior, prevent cross-contagion of risks, and promote a virtuous economic and financial cycle.
The "Financial Control Measures" clarified that the People's Bank of China shall supervise financial holding companies, and the financial management departments shall supervise financial institutions controlled by financial holding companies in accordance with the division of financial supervision duties.
The People's Bank of China, in conjunction with relevant departments, establishes an inter-departmental joint mechanism for financial holding company supervision to strengthen supervision cooperation and information sharing.
What are the procedures for establishing a financial holding company?
Those who have established the circumstances and intend to apply for the establishment of a financial holding company shall apply to the People's Bank of China within 12 months from the date of implementation of the "Financial Control Measures."
After the implementation of the "Financial Control Measures", if it is intended to control two or more different types of financial institutions in a substantial way and meet the circumstances for the establishment of a financial holding company, an application shall also be submitted to the People's Bank of China.
The approved financial holding company shall register with the market supervision and administration department on the basis of the financial holding company license issued by the People's Bank of China, and the name shall contain the words "financial holding".
How to regulate the shareholder and capital management of financial holding companies?
The first is to put forward requirements on the qualifications of shareholders in terms of core business, corporate governance, financial status, equity structure, risk management, etc., and put forward differentiated requirements for continuous profitability of major shareholders, controlling shareholders, and actual controllers.
The second is that the sources of investment funds should be in compliance with laws and regulations, and the regulatory authorities should implement penetrating management on them.
The third is to set up a negative list to clearly prohibit the conduct of the controlling shareholders of financial holding companies.
The fourth is to establish a capital adequacy regulatory system, and the capital of a financial holding group should be commensurate with its asset scale and risk level.
What are the requirements for the shareholding structure of financial holding companies?
First, the shareholding structure of a financial holding company should be concise, clear, and penetrable, with a reasonable level of legal person, and commensurate with its own capital scale, operational management capabilities, and risk control level. The holding institution must not hold reverse shares or cross shareholding.
The second is that financial institutions controlled by a financial holding company may no longer become major shareholders of other types of financial institutions, unless the financial institution controls a financial institution of the same type or business extension that is approved by the financial management department.
Third, enterprise groups that existed before the implementation of the "Financial Control Measures" but whose shareholding structure did not meet the requirements should be approved by the financial management department to reduce the complexity of the organizational structure and simplify the hierarchy of legal persons during the transition period.
What are the requirements for corporate governance and risk management of financial holding companies?
First, a financial holding company should improve its corporate governance structure, participate in the corporate governance of the holding institution in accordance with the law, and shall not interfere with the independent operation of the holding institution.
Implement record management for the appointment of directors, supervisors and senior management personnel of financial holding companies.
Second, financial holding companies should establish and improve a comprehensive risk management system on the basis of consolidation to cover the holding institutions and various risks.
The third is to establish and improve the group risk isolation mechanism, standardize the synergy effect, and focus on the protection of customer information.
The fourth is to strengthen the management of related party transactions. Related party transactions of the group shall comply with laws and regulations and follow market principles.
Why does the "Financial Control Measures" increase the amount of penalties for violations?
According to the relevant provisions of the "Administrative Punishment Law of the People's Republic of China" and "Notice of the State Council on the Implementation of the "Administrative Punishment Law of the People's Republic of China" (Guo Fa [1996] No. 13), with the approval of the State Council, the Financial Control Measures The amount of fines for violations.
This is conducive to promoting financial holding companies and related personnel to establish a legally compliant operation and practice concept, create a level playing field, maintain financial stability, and protect public interests.
How does the "Financial Control Measures" affect the financial market?
Generally speaking, the "Financial Control Measures" has a positive impact on financial institutions, non-financial enterprises and financial markets.
A financial holding company with a clear shareholding structure and a sound risk isolation mechanism as the controlling shareholder of financial institutions will help integrate financial resources and enhance operational stability and competitiveness.
In the long run, the promulgation of the "Financial Control Measures" is conducive to promoting orderly competition and healthy development of various institutions and preventing systemic financial risks.
How to arrange the transition period?
Institutions that have established the circumstances and intend to apply for the establishment of a financial holding company shall apply to the People's Bank of China for establishment within 12 months after the "Financial Control Measures" are formally implemented, and establish a financial holding company after approval.
Among them, institutions that fail to meet the regulatory requirements in terms of equity structure, etc., should formulate a rectification plan based on their actual conditions.
The People's Bank of China will reasonably set the transition period, grasp the rhythm and timing, and guide the orderly adjustment and smooth implementation of existing enterprises.
How about the public consultation and absorption?
From July 26 to August 24, 2019, we publicly solicited opinions on the "Financial Control Measures" through the Chinese Government's Legal Information Network and the People's Bank of China website. During the period, we received a total of 594 feedback opinions.
The People’s Bank of China analyzed and studied the opinions one by one, and adopted most of them, such as implementing differentiated requirements for shareholders of financial holding companies, extending the time limit for submitting applications for the establishment of financial holding companies, relaxing requirements for the legal person level of financial holding companies, and exempting new financial holding companies. Part of the qualifications for holding companies to become shareholders of financial institutions, increase the amount of fines for violations, etc.
The opinions on partial relaxation of regulatory requirements were not accepted.
Regarding suggestions for further refinement of relevant provisions, the People's Bank of China will study and formulate supporting documents to continuously improve the regulatory framework of financial holding companies.