Foreign Banks usher in New Space for Development
Measures for the implementation of Administrative Licensing matters of Foreign Banks began to solicit opinions--
Foreign Banks usher in New Space for Development
The draft for soliciting opinions allows foreign banks to set up branches and corporate banks at the same time, abolish the total asset requirements for foreign banks to set up business institutions in China, and relax the requirements for shareholders of Sino-foreign joint venture banks.
-relatively small foreign banks are likely to benefit more from opening up and are likely to significantly expand their business footprint in the future.
Recently, the China Banking and Insurance Regulatory Commission drafted the measures for the implementation of the Administrative license of Foreign Banks of the China Banking and Insurance Regulatory Commission (draft for soliciting opinions) (hereinafter referred to as the draft for soliciting opinions) to continuously promote the opening up of the banking industry to the outside world and promote the simplification of administration and decentralization. We will strengthen supervision over foreign banks.
"there are three main documents for the supervision of foreign banks. They are the regulations on the Administration of Foreign Banks issued by the State Council (hereinafter referred to as the regulations) and the rules for the implementation of the regulations on the Administration of Foreign Banks (hereinafter referred to as the rules for the implementation of the regulations) issued by the Banking and Insurance Regulatory Commission (hereinafter referred to as the regulations). Measures for the implementation of Administrative Licensing matters. " Yuan Xiaohui, a researcher at the Bank of China Research Institute, said: "on the whole, the regulations are a clear general program and direction for the supervision of foreign banks, while the two documents of the CBRC are the implementation and refinement of the regulations."
The reporter learned that the detailed rules for the implementation of the regulations are basically synchronized with the amendments to the regulations, and put forward overall requirements for the supervision of foreign banks mainly from the aspects of establishment and registration, business scope, supervision and management, termination of liquidation, legal liability, and so on. The first edition of the regulations was first promulgated in 1994 and has so far experienced five versions in 1994, 2001, 2006, 2014 and 2019, corresponding to five versions of the rules for the implementation of the regulations. There is also a 2004 revision that is a new revision after the issuer was replaced by the people's Bank of China with the China Banking Regulatory Commission.
Yuan Xiaohui said that the "measures for the implementation of Administrative Licensing matters for Foreign Banks" are more specific and detailed and are the practical manuals used by the CBI to regulate the behavior of foreign banks. Such as the establishment of the institutions referred to in the regulations and the rules for the implementation of the regulations, In the measures for the implementation of the Administrative license of Foreign Banks, it is detailed as follows: the establishment of wholly foreign-owned banks, Sino-foreign joint venture banks, branches of foreign banks, representative offices, branches and branches of foreign banks, Setting up or taking stakes in domestic banking financial institutions and other aspects, And each section will have detailed requirements and specific approval process. The revision of the measures for the implementation of Administrative Licensing matters for Foreign Banks is also more timely and frequent. Since the first edition in 2006, it has been revised four times, and the latest version is the draft for soliciting opinions issued recently in 2019.
It is worth noting that since the Boao Forum in 2018, China's new round of financial opening to the outside world has advanced steadily, and its overall principle is to implement the principle of consistency between domestic and foreign investment. These include abolishing the restrictions on foreign investment in Chinese financial institutions, expanding the scope of business of foreign banks, relaxing the conditions for the establishment of foreign banks, and so on. "the intensity of opening up is increasing, For example, the draft allows foreign banks to set up branches and corporate banks at the same time, abolish the total asset requirements for foreign banks to set up business institutions in China, and relax the requirements for shareholders of Sino-foreign joint venture banks. " Yuan Xiaohui said.
What is of concern is, with the gradual opening up of the banking industry to the outside world, what impact will it have on the domestic banking industry? In this regard, many industry insiders said that foreign banks will steadily promote the business layout, will not be too radical. Many foreign banks themselves pay more attention to risk control and return on investment, and will not enter the Chinese market on a large scale in the short term.
"the competitive pressure is mainly focused on diversification. Foreign banks have less capital and customer base than Chinese banks, but they have rich experience and competitive advantages in high-end wealth management, derivatives trading and other businesses. " Yuanghui said that the competitive pressure of small and medium-sized banks is relatively high. Compared with larger and longer-growing foreign banks in China, such as HSBC, Citigroup and Standard Chartered, relatively small foreign banks are likely to benefit more from opening up measures and are likely to significantly expand their business layout in the future.
Some experts also said that the complementary advantages of Chinese and foreign banks will be obviously prominent. With their rich market experience, capital and customer advantages, foreign banks have a diversified range of products and management mechanisms. The cooperation between the two sides will usher in more room for profit.
In the view of many people in the industry, for foreign banks, the development of business in the future may change. For example, foreign banks may increase the layout of key areas and key businesses. From a regional point of view, the layout of foreign banks in the Pearl River Delta, Guangdong-Hong Kong-Macau Greater Bay Area is relatively intensive, and business investment is relatively concentrated, in the future will continue to increase the layout in these areas.
"in terms of business, many foreign banks regard 'going out' Chinese customers as one of the key customers serving in China, especially the growing unicorn enterprises. They rely on integration, a package of financial services platform, rich overseas network institutions and management mechanisms and performance appraisal mechanisms, through collaboration with the parent bank group, to provide a wealth of financial products and services for Chinese enterprises in overseas markets. " In addition, the optimization of the approval process is also a good thing for foreign banks and will be more conducive to their business, Mr Yuan said. (reporter Qian Jiedu)