ENG
ESP
FR
DE
IT
Aug. 24 – China Banking Regulatory Commission recently released a regulation on financial cooperation business, aiming to better regulate banking credit and financial cooperation.
Yinjianfa [2010] No. 72, issued on August 10, states that the CBRC should further regulate the financing of bank credit and financial cooperative business in fund companies. Specifically, the balance of the financing business cannot exceed 30 percent of bank credit for financial cooperation.
Furthermore, the regulation stipulates that the financing business includes, but is not limited to, trust loans, the transfer of credit or paper assets, investment which is affixed additional repurchase or has repurchase options, stock collateral financing, and other asset securitization businesses.
Moreover, the regulation specifies that commercial banks should include all off-balance-sheet assets on their balance sheets; large banks and small banks should both make capital provisions at a capital adequacy rate of 11.5 percent and 10 percent, respectively.
QFII business should take note of this, there may be repercussions. While the main targeting of thtis regulation is domestic banks, to ensure capabilities over domestic bad loans in China, there may be issues for foreign financial businesses also. We’ll advice on the implications of this for foreign investors shortly. Thanks – Chris