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China is taking measures to further improve the foreign investment and operating environment in financial areas with the goal of making the banking and finance industry more open and market-based.
According to Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission (CBIRC, after conducting in-depth study and evaluation, China will soon issue 12 new opening-up measures to further level the playing field for foreign and domestic companies.
China will remove the ownership limits in Chinese commercial banks for both Chinese and foreign banks. China will also scrap the total asset requirements of $10 billion and $20 billion for foreign banks to set up foreign-funded banks and subsidiaries, respectively, in China.
China will allow overseas financial institutions to become shareholders of foreign-owned insurance companies in China. Foreign insurance groups will be permitted to establish insurance companies in China based on the requirements of Chinese-funded insurance groups.
Requiring 30 years of operation and total assets of no less than $200 million for foreign insurance brokerage companies to do business in China will also be canceled.
At the same time, China will relax access policies for Chinese and foreign financial institutions in the establishment of consumer finance companies. The $1 billion asset requirement for overseas financial institutions to invest into Chinese trust companies will also be lifted.
According to Guo private capital currently accounts for 43% of total equity in Chinese joint-stock banks, 56% in municipal commercial banks, 83% in rural commercial banks and 49% in insurers, while foreign invested banks and foreign invested insurers account for 1.64% and 6.36% of total assets in their respective sectors in China.
Below is the 12 opening measures on banking and finance area:
1. The simultaneous cancellation on ceilings on holdings of equity by a single Chinese-invested or a single foreign-invested bank in a Chinese commercial bank, in accordance with the principle that domestic and foreign investors are treated consistently;
2. The cancellation of the USD$10 billion total assets requirement for foreign banks establishing foreign invested legal person banks in China, and the $20 billion total assets requirement for foreign banks establishing branches in China;
3. The cancellation of the $1 billion total assets requirement for offshore financial institutions investing in the equity of trust companies;
4. Allowing offshore financial institutions to invest in the equity of foreign-invested insurers in China;
5. The cancellation of the requirement that insurance brokers engaging in insurance brokerage operations in China have been in operation for at least 30 years, and have total assets of no less than $200 million;
6. Loosening of restrictions on Chinese shareholders in Sino-foreign joint-venture banks, and the cancellation of the requirement that the sole or primary Chinese shareholder be a financial institution;
7. Encouraging and supporting foreign financial institutions to engage in equity, operational and technical cooperation with privately controlled banking sector and insurance sector institutions;
8. Allowing foreign insurance group companies to invest in the establishment of insurance institutions;
9. Allowing foreign-invested insurance group companies in China to establish insurance institutions with reference to the qualification requirements for Chinese-invested insurance group companies;
10. The simultaneous loosening of entry policies for Chinese-invested and foreign-invested financial institutions to invest in and establish consumer finance companies, in accordance with the principle that domestic and foreign investors are treated consistently;
11. The cancellation of examinations and approvals for foreign-invested banks to handle renminbi operations, and allowing foreign-invested banks to engage in renminbi operations when they do business;
12.Allowing foreign-invested banks to engage in agency collection and payments operations.
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